Question

On August 1, a $58,800, 9%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $23,229.22. The entry to record the first payment on July 31 would include:

Answer 1

Based on the information given the entry to record the first payment on July 31 would include: Debit to Interest Expense of $5,292.00.

The appropriate journal entry to record the first payment on July 31 based on the information given is:

Journal entry

July 31

Debit Interest Expense $5,292.00

($58,800×9%)

Debit Notes Payable $17,937.22

($23,229.22-$5,292.00)

Credit Cash $23,229.22

(To record first payment)

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