On January 1, MM Company borrows $290,000 cash from a bank and in return signs an 4% installment note for five annual payments of $65,142 each. 1. Prepare the journal entry to record issuance of the note. 2. For the first $65,142 annual payment at December 31, what amount goes toward interest expense? What amount goes toward principal reduction of the note?

On January 1, MM Company borrows $290,000 cash from a bank and in return signs an 4% installment note for five annual payments of $65,142 each. 1. Prepare the journal entry to record issuance of the note. 2. For the first $65,142 annual payment at December 31, what amount goes toward interest expense? What amount goes toward principal reduction of the note?

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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