Question

Access an online loan calculator with annual payments, such as the one at mycalculators.com, to produce an amortization schedule for Welton Corp.’s installment note that has original principal of $21,000, interest of 5% compounded annually, and a term of 3 years.

Welton Corp. established the note on the first day of its fiscal year, and will fully repay the note by the end of year 3 on its December 31 fiscal year-end. Prepare Welton Corp.’s journal entries on (a) January 1, Year 1, (b) December 31, Year 1, (c) December 31, Year 2, and (d) December 31, Year 3. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to nearest whole dollar amount.)

Journal entry worksheet 2 3 4 January 1, Year 1. Note: Enter debits before credits. Transaction General Journal Debit Credit (a) Record entry Clear entry View general journal
  

  

Answer 1

Journal Entries - Date Accounts Title & Explanation Debit $ Credits Year:1 01-Jan 21,000 Cash To 5% Notes Payable (Entry for issue of 5% notes payable) 21,000 31-Dec Interest expenses (21000*5%) 1,050 To Interest Payable (Entry for recording of 1st year accrued interest expense) 1,050 Year:2 31-Dec Interest expenses (21000*5%) 1,050 To Interest Payable (Entry for recording of 2nd year accrued interest expense) 1,050 Year :3 31-Dec 1,050 Interest expenses (21000*5%) To Interest Payable (Entry for recording of 3rd year accrued interest expense) 1,050 31-Dec 21,000 3,150 5% Notes Payable Interest Payable To Cash (Entry for recording of settlement of notes payable) 24,150