Question

On January 1, 20Y2, Hebron Company issued a $184,000, five-year, 8% installment note to Ventsam Bank. The note requires annual payments of $46,084, beginning on December 31, 20Y2. Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles. 20Y2 Jan. Dec. 1 31 Issued the note for cash at its face amount. Paid the annual payment on the note, which consisted of interest of $14,720 and principal of $31,364. 20Y5 Dec. 31 Paid the annual payment on the note, included $6,574 of interest. The remainder of the payment reduced the principal balance on the note.

Answer 1

Date	General Journal	Debit	Credit
January 1, 20Y2	Cash	$184,000
	Note payable		$184,000
	( To record note issued)
December 31, 20Y2	Note payable	$31,364
	Interest expense	$14,720
	Cash		$46,084
	( To record annual payment of note including interest)
December 31, 20Y5	Note payable	$39,510
	Interest expense	$6,574
	Cash		$46,084
	(To record annual payment of note including interest)

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