Required information

Skip to question

On January 1, MM Company borrows $280,000 cash from a bank and in return signs an 8% installment note for five annual payments of $70,128 each.

[The following information applies to the questions displayed below.] On January 1, MM Company borrows $280,000 cash from a bank and in return signs an 8% installment note for five annual payments of $70,128 each.

1. Prepare the journal entry to record issuance of the note. 2. For the first $70,128 annual payment at December 31, what amount goes toward interest expense? What amount goes toward principal reduction of the note?