Entries for Installiment Note Transactions On January 1 of 20Y2, Hebron Company

Question

Entries for Installiment Note Transactions On January 1 of 20Y2, Hebron Company issued a $45,000, 4-year 8% installment note to Ventsam Bank The note requires annual payments of $13,586, beginning on December 31 of 20Y2. Journalize the entries to record the following 20Y2 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 $3,600 and principal of $9,986. 20YS Paid the annual payment on the note, which Included interest of $1,006. The remainder of the payment reduced the principal balance on the note. Dec. 31 Issued the note for cash at its face amount. Year 1 Jan. Paid the annual payment on the note, which consisted of interest of $3,600 and principal of $9,986. If an amount box does not require an entry, leave it blank Year 1 Dec. 31

Explanation / Answer

Date Account Debit credit jan1 cash 45000 Note payable 45000 year1 dec 31 Note payable 9986 Interest expense 3600 cash 13586 year 4 dec 31 Note payable 12580 Interest expense 1006 cash 13586

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