Entries for installment note transactions On January 1, 2014, O\'Brien Company i

Question

Entries for installment note transactions

On January 1, 2014, O'Brien Company issued a $210,000, six-year, 9% installment note to Bulldog Bank. The note requires annual payments of $46,813, beginning on December 31, 2014. Journalize the entries to record the following:

2014

Jan. 1. Issued the notes for cash at their face amount.

Dec. 31. Paid the annual payment on the note, which consisted of interest of $18,900 and principal $27,913.

2017

Dec. 31. Paid the annual payment on the note, included $10,665 of interest. The remainder of the payment reduced the principal balance on the note.

Explanation / Answer

Date Titles Debit Credit 2014 Jan-01 Cash $ 210,000 Note payable $ 210,000 (To record issue of 9% six year note) Dec-31 Interest expenses $    18,900 Note payable $    27,913 Cash $    46,813 (to record installment payment) 2017 Dec-31 Interest expenses $    10,665 Note payable ($46,813-$10,665) $    36,148 Cash $    46,813 (to record installment payment)

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