On January 1, 20Y2, Hebron Company issued a $213,000, five-year, 4% installment note to Ventsam Bank. The note requires annual payments of $47,846, 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. 20Y5 Dec. 1 Issued the note for cash at its face amount. 31 Paid the annual payment on the note, which consisted of interest of $8,520 and principal of $39,326. 31 Paid the annual payment on the note, included $3,610 of interest. The remainder of the payment reduced the principal balance on the note.
On January 1, 20Y2, Hebron Company issued a $213,000, five-year, 4% installment note to Ventsam Bank. The note requires annual payments of $47,846, 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. 20Y5 Dec. 1 Issued the note for cash at its face amount. 31 Paid the annual payment on the note, which consisted of interest of $8,520 and principal of $39,326. 31 Paid the annual payment on the note, included $3,610 of interest. The remainder of the payment reduced the principal balance on the note.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 20Y2, Hebron Company issued a $213,000, five-year, 4% installment note to Ventsam Bank. The note requires annual payments of $47,846, 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.
20Y5
Dec.
1 Issued the note for cash at its face amount.
31 Paid the annual payment on the note, which consisted of interest of $8,520 and principal of $39,326.
31
Paid the annual payment on the note, included $3,610 of interest. The remainder of the payment
reduced the principal balance on the note.
Expert Solution
Step 1: Define of notes payable
The company can raise funds by issuing notes. The note is a promise by the entity to pay the principal with interest. The company makes the payment of the note in installment if terms of the note allow. If the note is paid in installments then installment payment decreases the principal because installments consist of both interest and installment.
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