On the first day of the fiscal year, a company issues $63,000, 12%, five-year installment notes that have annual payments of $17,477. The first note payment consists of $7,560 of interest and $9,917 of principal repayment.

a. Journalize the entry to record the issuance of the installment notes. If an amount box does not require an entry, leave it blank.

	Accounts PayableBonds PayableCashInterest ExpenseInterest PayableNotes PayableCash	Cash	Cash
	Accounts PayableBonds PayableCashInterest ExpenseInterest PayableNotes PayableNotes Payable	Notes Payable	Notes Payable

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The cash payment is the same in each year. The interest and principal repayment, however, change each year. This is because the carrying amount (book value) of the note decreases each year as principal is repaid, which decreases the interest.

b. Journalize the first annual note payment. If an amount box does not require an entry, leave it blank.

	Accounts PayableBonds PayableCashInterest ExpenseInterest PayableInterest ReceivableInterest Expense	Interest Expense	Interest Expense
	Accounts PayableAccounts ReceivableBonds PayableCashInterest PayableNotes PayableNotes Payable	Notes Payable	Notes Payable
	Accounts PayableBonds PayableCashInterest ExpenseInterest PayableNotes PayableCash	Cash	Cash