Question

# Exercise 10-11 Installment note entries LO C1 On January 1, 2018, Eagle borrows \$20,000 cash by...

Exercise 10-11 Installment note entries LO C1 On January 1, 2018, Eagle borrows \$20,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of \$5,905, consisting of accrued interest and principal on December 31 of each year from 2018 through 2021. (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.) Prepare the journal entries for Eagle to record the loan on January 1, 2018, and the four payments from December 31, 2018, through December 31, 2021.

• 1

Eagle borrows \$20,000 cash by signing a four-year, 7% installment note. Record the issuance of the note on January 1, 2018.

• 2

Record the payment of the first installment payment of interest and principal on December 31, 2018.

• 3

Record the payment of the second installment payment of interest and principal on December 31, 2019.

• 4

Record the payment of the third installment payment of interest and principal on December 31, 2020.

• 5

Record the payment of the fourth installment payment of interest and principal on December 31, 2021.

General Journal

 No Date Account Title and Explanation Debit Credit 1 Jan.01.2018 Cash \$20,000 Note Payable \$20,000 2 Dec.31.2018 Interest Expense \$1,400 NotePayable \$4,505 Cash \$5,905 3 Dec.31.2019 Interest Expense \$1,085 Note Payable \$4,820 Cash \$5,905 4 Dec.31.2021 Interest Expense \$747 NotePayable \$5,158 Cash \$5,905 5 Dec.31.2022 Interest Expense \$388 Note Payable \$5,517 Cash \$5,905

Explanation;

Payments

 Period A B C D E Ending Date Beginning Balance Debit Interest Expense Debit Note Payable Credit Cash Ending Balance 2018 \$20,000 \$1,400 \$4,505 \$5,905 \$15,495 2019 \$15,495 \$1,085 \$4,820 \$5,905 \$10,675 2020 \$10,675 \$747 \$5,158 \$5,905 \$5,517 2021 \$5,517 \$388* \$5,517 \$5905 Total \$3,620 \$20,000 \$23,620

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