# On January 1, 2018, King Inc. borrowed \$150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of \$39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 13, Problem 1PA
Textbook Problem
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## On January 1, 2018, King Inc. borrowed \$150,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of \$39,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.)

To determine

Concept introduction:

Notes payable:

Notes payable is defined as a liability that represents the loan that is taken by the business. It is usually issued by a debtor to the creditors for the liability of payments for issuing various supplies. The balance in the Notes Payable account represents the amounts that are to be paid.

To prepare:

The journal entries for Issuance of note and first installment payment.

### Explanation of Solution

The journal entries for Issuance of note and first installment payment are explained as follows:

 Journal entries Date Account Title Debit Credit Jan. 1, 2018 Cash \$ 150,000 Notes Payable \$ 150,000 (Being amount borrowed through long term note payable ) Dec. 31, 2018 Interest Expense \$ 15,000.00 Note Payable \$ 24,569.00 Cash \$ 39,569...

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