On January 1, 2018. Trop al Paradise bomo s S3 1,000 by agreeing to a 6%, six-ye

Question

On January 1, 2018. Trop al Paradise bomo s S3 1,000 by agreeing to a 6%, six-year note with the bank. The funds wil bo used to purchase a new BMW o nvertible for se in promoting resort properties to potential customers. Loan payments of $513.76 are due at the end of each month with the first installment due on January 31, 2018 Record the issuance of the installment note payable and the first two monthly payments. (Do not round intermediate calculations. Round your final answers to 2 decimal places. View transaction list Journal entry worksheet Record the issuance of a note payable. Note: Enter debits before credits Debit Credit Date General Journal January 01, 2018 View general journal Record entry Clear entry 5 7 8 9

Explanation / Answer

1-

Month

opening Balance

Monthly payment

interest

principal

month end balance

date

explanation

debit

credit

0

31000

1-Jan

cash

31000

1

31000

513.76

155

358.76

30641.24

notes payable

31000

2

30641.24

513.76

153.2062

360.5538

30280.69

31-Jan

interest expense

155

notes payable

358.76

cash

513.76

28-Feb

interest expense

153.2062

notes payable

360.5538

cash

513.76

2-

Year

cash paid = 510000*7%

interest expense = carrying value *6%

Decrease in carrying value = cash paid -interest epxense

carrying value = carrying value- decrease in carrying value

Jan-18

547534

Dec 31 2018

35700

32852.04

2847.96

544686

Dec 31 2019

35700

32681.16

3018.838

541667.2

date

explanation

debit

credit

1-Jan

cash

547534

bonds payable

510000

premium on bonds payable

37534

Dec 31 2018

interest expense

32852.04

premium on bonds payable

2847.96

cash

35700

Dec 31 2019

interest expense

32681.16

premium on bonds payable

3018.838

cash

35700

1-

Month

opening Balance

Monthly payment

interest

principal

month end balance

date

explanation

debit

credit

0

31000

1-Jan

cash

31000

1

31000

513.76

155

358.76

30641.24

notes payable

31000

2

30641.24

513.76

153.2062

360.5538

30280.69

31-Jan

interest expense

155

notes payable

358.76

cash

513.76

28-Feb

interest expense

153.2062

notes payable

360.5538

cash

513.76

2-

Year

cash paid = 510000*7%

interest expense = carrying value *6%

Decrease in carrying value = cash paid -interest epxense

carrying value = carrying value- decrease in carrying value

Jan-18

547534

Dec 31 2018

35700

32852.04

2847.96

544686

Dec 31 2019

35700

32681.16

3018.838

541667.2

date

explanation

debit

credit

1-Jan

cash

547534

bonds payable

510000

premium on bonds payable

37534

Dec 31 2018

interest expense

32852.04

premium on bonds payable

2847.96

cash

35700

Dec 31 2019

interest expense

32681.16

premium on bonds payable

3018.838

cash

35700

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