Question

# On January 1, 2016, Eagle borrows \$26,000 cash by signing a four-year, 8% installment note. The...

On January 1, 2016, Eagle borrows \$26,000 cash by signing a four-year, 8% installment note. The note requires four equal total payments of accrued interest and principal on December 31 of each year from 2016 through 2019. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest dollar amount. Round all table values to 4 decimal places, and use the rounded table values in calculations.)

Calculate the amount of the annual payments, and then prepare the journal entries for Eagle to record the loan on January 1, 2016, and the four payments from December 31, 2016, through December 31, 2019.

interest rate, notes payable/ table value = cash paid

then record payment of first instillation payment of interest and principle on Dec. 31, 2016. , record payment of second instillation payment of interest and principle Dec 31 2017, record payment of third instillation payment of interest and principle on dec 31 2018, record payment of fourth instillation payment of interest and principle on dec 2019 (make sure balance on notes payment is 0)

#### Homework Answers

Answer #1

Solution:

Calculation of the Amount of the Annual Payments:

 Interest Rate Initial Note Balance Table Value Amount of Each Payment 8.0% \$26,000 / 3.31213 = \$7,850

Preparing the Journal Entries for Eagle to Record the Loan on January 1, 2016 and the Four Payments from December 31, 2016 through December 31, 2019:

 Date General Journal Debit Credit Jan 1, 2016 Cash \$26,000 Notes Payable \$26,000 Dec 31, 2016 Interest Expense \$2,080 Notes Payable \$5,770 Cash \$7,850 Dec 31, 2017 Interest Expense \$1,618 Notes Payable \$6,232 Cash \$7,850 Dec 31, 2018 Interest Expense \$1,120 Notes Payable \$6,730 Cash \$7,850 Dec 31, 2019 Interest Expense \$582 Notes Payable \$7,268 Cash \$7,850
Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT
##### Active Questions
• QUESTION 41 Use the following scenario and data for questions 41 to 45: The distribution of...
asked 1 minute ago
• Use the method of Lagrange multipliers to find the minimum value of the function f(x,y,z)=x2+y2+z2 subject...
asked 2 minutes ago
• Suppose we repeatedly take samples of size 100 from the population distribution, calculate a sample mean...
asked 2 minutes ago
• A continuous random variable X has the following probability density function F(x) = cx^3, 0<x<2 and...
asked 10 minutes ago
• The following is a December 31, 2018, post-closing trial balance for Culver City Lighting, Inc. Account...
asked 13 minutes ago
• The Carolina Tobacco Company advertised that its bestselling non-filtered cigarettes contain 40 milligrams of nicotine. Consumer...
asked 13 minutes ago
• What is the magnetic force experienced by a conduit that is in a plane with the...
asked 14 minutes ago
• The mean weight of newborns in the U.S. is 3420g. A random sample of n =...
asked 15 minutes ago
• The City of Detroit has a high number of people without health insurance. The city also...
asked 19 minutes ago
• The drawer contains 10 white socks, 20 brown socks, 15 blue socks, and 10 blacksocks. How...
asked 36 minutes ago
• The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
asked 36 minutes ago
• You are marooned on a tropical island. Design a telescope from a cardboard map tube and...
asked 44 minutes ago