Question

In January 1, 2017 Eagle borrows $25000 cash by signing a four-year, 7% installment note. The...

In January 1, 2017 Eagle borrows $25000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $7,381, consisting of accrued interest and principle on December 31 of each year from 2017 through 2020. (Use appropriate factors from the tables. Round your intermediate calculations and final answer to the nearest dollar amounts. Round all table values to 4 decimal places, and use the rounded table values in calculations.)

Prepare the journal entries for Eagle to record the loan on January 1, 2017, and the four payments from December 31, 2017 through December 31, 2020

Homework Answers

Answer #1
Debit Credit
January 1, 2017 Cash 25000
     Notes payable 25000
December 31, 2017 Interest expense 1750 =25000*7%
Notes payable 5631
     Cash 7381
December 31, 2018 Interest expense 1356 =(25000-5631)*7%
Notes payable 6025
     Cash 7381
December 31, 2019 Interest expense 934 =(25000-5631-6025)*7%
Notes payable 6447
     Cash 7381
December 31, 2020 Interest expense 484 =(25000-5631-6025-6447)*7%
Notes payable 6897
     Cash 7381
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