Exercise 14-11 Installment note entries LO C1 On January 1, 2 17, Eagle borrows

Question

Exercise 14-11 Installment note entries LO C1 On January 1, 2 17, Eagle borrows sso o cash by signing a four-year, 7% installment note. The note requires four equal payments of 510,333, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020 (Table B.1. Table B.2. Table B.3, and Table 8.4) (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.) 15 points Prepare the journal entries for Eagle to record the loan on January 1, 2017, and the four payments from December 31.2 December 31, 2020

Explanation / Answer

Date

Account Titles & Explanation

Debit

Credit

Jan. 1, 2017

Cash

$35000

     Notes Payable

$35000

(To record borrowed money)

Dec. 31, 2017

Notes Payable ($10333 – $2450)

$7883

Interest expense ($35000 * 0.07)

$2450

     Cash

$10333

(To record installment payment)

Dec. 31, 2018

Notes Payable ($10333 – $1726.69)

$8606.31

Interest expense ($24667 * 0.07)

$1726.69

     Cash

$10333

(To record installment payment)

Dec. 31, 2019

Notes Payable ($10333 – $1003.38)

$9329.62

Interest expense ($14334 * 0.07)

$1003.38

     Cash

$10333

(To record installment payment)

Dec. 31, 2020

Notes Payable ($10333 – $280.07)

$10052.93

Interest expense ($4001 * 0.07)

$280.07

     Cash

$10333

(To record installment payment)

Date

Account Titles & Explanation

Debit

Credit

Jan. 1, 2017

Cash

$35000

     Notes Payable

$35000

(To record borrowed money)

Dec. 31, 2017

Notes Payable ($10333 – $2450)

$7883

Interest expense ($35000 * 0.07)

$2450

     Cash

$10333

(To record installment payment)

Dec. 31, 2018

Notes Payable ($10333 – $1726.69)

$8606.31

Interest expense ($24667 * 0.07)

$1726.69

     Cash

$10333

(To record installment payment)

Dec. 31, 2019

Notes Payable ($10333 – $1003.38)

$9329.62

Interest expense ($14334 * 0.07)

$1003.38

     Cash

$10333

(To record installment payment)

Dec. 31, 2020

Notes Payable ($10333 – $280.07)

$10052.93

Interest expense ($4001 * 0.07)

$280.07

     Cash

$10333

(To record installment payment)

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