**Practical Accounting Exercise: Recording Installment Notes****Scenario:**On January 1, 2021, Tropical Paradise borrows $36,000 by agreeing to a 5%, four-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $829.05 are due at the end of each month, with the first installment due on January 31, 2021.**Instructions:**You are required to record the issuance of the installment note payable and the first two monthly payments. Ensure to round your final answers to two decimal places. Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.**Journal Entry Worksheet:**- **Step 1: Record the Issuance of a Note Payable** *Date: January 01, 2021* | General Journal Entries | Debit | Credit | |-------------------------|-------|--------| | | | | | | | | | | | |*Note: Enter debits before credits.*(Here, the empty journal entries are placeholders for students to fill in with appropriate accounting entries related to the issuance of the note payable and subsequent monthly payments.)

Journal entry to record issue of installment note and first two monthly payments are as under: Journal Entries - Tropical Paradise Date Particulars Debit Credit 1-Jan-21 Cash $36,000.00 Notes Payable $36,000.00 (To record amount borrowed by issue of installment note) 31-Jan-21 Interest expense ($36,000*5%*1/12) $150.00 Notes Payable $679.05 Cash $829.05 (To record first installment payment) 28-Feb-21 Interest expense ($35,320.95*5%*1/12) $147.17 Notes Payable $681.88 Cash $829.05 (To record Second installment payment)

Business

Accounting

On January 1, 2021, Tropical Paradise borrows $36,000 by agreeing to a 5%, four-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $829.05 are due at the end of each month with the first installment due on January 31, 2021. Required: Record the issuance of the installment note payable and the first two monthly payments. (Do not round intermediate calculations. Round your final answers to 2 decimal places. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list

On January 1, 2021, Tropical Paradise borrows $36,000 by agreeing to a 5%, four-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $829.05 are due at the end of each month with the first installment due on January 31, 2021. Required: Record the issuance of the installment note payable and the first two monthly payments. (Do not round intermediate calculations. Round your final answers to 2 decimal places. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list

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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