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On January 1, the first day of the fiscal year, Shiller Company borrowed $145,000 by giving a seven-year, 5% installment note to Soros Bank. The note requires annual payments of $25,059, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $7,250 and principal repayment of $17,809.
Required:
A. Journalize the entries to record the following transactions.
1. Issued the installment note for cash on the first day of the fiscal year.
2. Paid the first annual payment on the note.
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Question & Answer: On January 1, the first day of the fiscal year, Shiller Company borrowed $145,000 by giving a seven-year, 5% installment n…..
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JOURNAL ENTRIES :
| DATE | ACCOUNTS & EXPLANATION | DEBIT | CREDIT |
| Jan 1 | Cash a/c | 145000 | |
| Notes Payable a/c | 145000 | ||
| (TO record borrow money by notes) | |||
| Dec 31 | Interest expenses a/c | 7250 | |
| Notes payable a/c | 17809 | ||
| Cash a/c | 25059 | ||
| (To record first annual payment on the note) |
