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On the first day of the fiscal year, a company issues $65,000, 6%, five-year installment notes that have annual payments of $15,431. The first note

On the first day of the fiscal year, a company issues $65,000, 6%, five-year installment notes that have annual payments of $15,431. The first note payment consists of $3,900 of interest and $11,531 of principal repayment.

Journalize the following transactions. Be sure to include the year in the date for both entries. Refer to the Chart of Accounts for exact wording of account titles.

2016

Jan. 1 Installment notes are issued

2017

Jan. 1 First annual note payment is made

CHART OF ACCOUNTS

ASSETS

110Cash

111Petty Cash

121Accounts Receivable

122Allowance for Doubtful Accounts

126Interest Receivable

127Notes Receivable

131Merchandise Inventory

141Office Supplies

191Land

194Office Equipment

195Accumulated Depreciation-Office Equipment

LIABILITIES

210Accounts Payable

221Salaries Payable

231Sales Tax Payable

232Interest Payable

241Notes Payable

251Bonds Payable

252Discount on Bonds Payable

253Premium on Bonds Payable

EQUITY

311Common Stock

312Paid-In Capital in Excess of Par-Common Stock

315Treasury Stock

321Preferred Stock

322Paid-In Capital in Excess of Par-Preferred Stock

331Paid-In Capital from Sale of Treasury Stock

340Retained Earnings

351Cash Dividends

352Stock Dividends

390Income Summary

REVENUE

410Sales

610Interest Revenue

611Gain on Redemption of Bonds

EXPENSES

510Cost of Merchandise Sold

515Credit Card Expense

516Cash Short and Over

522Office Salaries Expense

531Advertising Expense

532Delivery Expense

533Repairs Expense

535Rent Expense

536Insurance Expense

537Office Supplies Expense

541Bad Debt Expense

562Depreciation Expense-Office Equipment

590Miscellaneous Expense

710Interest Expense

711Loss on Redemption of Bonds

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