Question

On the first day of the fiscal year, a company issues $39,000, 10%, four-year installment notes that have annual payments of $12,303. The first note payment consists of $3,900 of interest and $8,403 of principal repayment. a. Journalize the entry to record the issuance of the installment notes. Cash b. Journalize the first annual note payment. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Ans.	Date	Accounts and Titles				Dr.($)	Cr.($)
	(a)	Cash				39,000
		To 10% Notes Payable					39,000
		(Being company issues 10% Notes for four years )
	(b)	10% Notes Payable				8,403
		Interest				3,900
		To Cash					12,303
		(Being first payment made by company which consist 3900 interest and 8403 principal)