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On the first day of the fiscal year, a company issues $90,000, 6%, five-year installment notes that have annual payments of $21,366. The first note

On the first day of the fiscal year, a company issues $90,000, 6%, five-year installment notes that have annual payments of $21,366. The first note payment consists of $5,400 of interest and $15,966 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
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful Accounts
126 Interest Receivable
127 Notes Receivable
131 Merchandise Inventory
141 Office Supplies
191 Land
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
315 Treasury Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
541 Bad Debt Expense
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds

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