A corporation borrowed $115,000 cash by signing a 5-year, 9% installment note re

Question

A corporation borrowed $115,000 cash by signing a 5-year, 9% installment note requiring equal annual payments each December 31 of $29,566. What journal entry would the issuer record for the first payment? Debit Notes Payable $29,566; credit Cash $29,566. Debit Notes Payable $29,566; debit Interest Payable $10,350; credit Cash $39,916. Debit Interest Expense $10,350; debit Notes Payable $19,216; credit Cash $29,566. Debit Notes Payable $10,350; credit Cash $10,350. Debit Interest Expense $6,566; debit Notes Payable $23,000; credit Cash 29,566.

Explanation / Answer

For first payment, company paid cash for $29,566. The interest expense = 115000*9% = 10,350 Debit Expense $10,350 Debit Notes Payable $19,216 Credit Cash $29,566

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.