**Educational Content: Understanding Journal Entries for Loan Payments**---**Scenario:**On January 1, 2018, King Inc. borrowed $190,000 by signing a 5-year note payable with a 10% interest rate. The annual payment amount is $47,569, due each December 31.**Objective:**Determine the journal entries for:1. **January 1**: Record the cash received.2. **December 31**: Record the annual payment. This requires preparation of an amortization table to calculate the amounts.**Instructions:**If any amount box does not require an entry, leave it blank.---**Journal Entries:**1. **January 1:** - **Record Receipt of Cash:** - **Debit**: Cash - **Credit**: Note Payable - Amounts need to be calculated based on the loan and interest specifics.2. **December 31:** - **Record Interest and Principal Payment:** - **Credit**: Note Payable - **Debit**: Interest Expense - **Credit**: Cash - Each entry's amount derives from the amortization calculations.---**Graph/Diagram Explanation:**The diagram presents two tables for journal entry, corresponding to different dates (Jan 1 and Dec 31). Each row has three columns: two with drop-down menus for selecting account names and one for entering amounts. The options selected are "Cash," "Note Payable," and "Interest Expense."- The **January 1 entry** is complete with account names.- The **December 31 entry** highlights which accounts need to be recorded for a complete transaction cycle each year. For accurate financial reporting, these entries are necessary to reflect both receipt of funds and their subsequent usage, including paying interest and reducing principal amounts.--- Use this information as a template to understand how such loan transactions are recorded in accounting journals, accurately reflecting the financial state of a company over the loan's duration.

Note payable: The person borrows an amount and issue a note to the lender that he will pay the…

On January 1, 2018, King Inc. borrowed $190,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $47,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.) If an amount box does not require an entry, leave it blank. Jan. 1 Cash Note Pavable ✓ Dec. 31 Note Payable Interest Expense Cash •✓ 00 000 00000

On January 1, 2018, King Inc. borrowed $190,000 and signed a 5-year, note payable with a 10% interest rate. Each annual payment is in the amount of $47,569 and payment is due each Dec. 31. What is the journal entry on Jan. 1 to record the cash received and on Dec. 31 to record the annual payment? (You will need to prepare the first row in the amortization table to determine the amounts.) If an amount box does not require an entry, leave it blank. Jan. 1 Cash Note Pavable ✓ Dec. 31 Note Payable Interest Expense Cash •✓ 00 000 00000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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