Entries for installment note transactionsOn January 1, Year 1, Luzak Company issued a $120,000, five-year, 6% installment note to McGee Bank. The note requires annual payments of $28,488, beginning on December 31, Year 1. Journalize the entries to record the following: Year1 Jan. 1. Issued the note for cash at its face amount. Dec 31. Paid the annual payment on the note, which consisted of interest of $7,200 and principal of $21,288. Year4 dec 31. Paid the annual payment on the note, including $3,134 of interest. The remainder of the payment reduced the principal balance on the note.
Entries for installment note transactionsOn January 1, Year 1, Luzak Company issued a $120,000, five-year, 6% installment note to McGee Bank. The note requires annual payments of $28,488, beginning on December 31, Year 1. Journalize the entries to record the following: Year1 Jan. 1. Issued the note for cash at its face amount. Dec 31. Paid the annual payment on the note, which consisted of interest of $7,200 and principal of $21,288. Year4 dec 31. Paid the annual payment on the note, including $3,134 of interest. The remainder of the payment reduced the principal balance on the note.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 11E
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Entries for installment note transactions
On January 1, Year 1, Luzak Company issued a $120,000, five-year, 6% installment note to McGee Bank. The note requires annual payments of $28,488, beginning on December 31, Year 1.
Year1 | |
Jan. 1. | Issued the note for cash at its face amount. |
Dec 31. | Paid the annual payment on the note, which consisted of interest of $7,200 and principal of $21,288. |
Year4 | |
dec 31. | Paid the annual payment on the note, including $3,134 of interest. The remainder of the payment reduced the principal balance on the note. |
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