Question
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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