On January 1, the first day of the fiscal year, Shiller Company borrowed $86,000 by giving a seven-year, 8% installment note to Soros Bank. The note requires annual payments of $16,518, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $6,880 and principal repayment of $9,638. Required: a. Journalize the entries to record the following transactions, Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 1. Issued the installment note for cash on the first day of the fiscal year. 2. Paid the first annual payment on the note. b. Explain how the notes payable would be reported on the balance sheet at the end of the first year.

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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On January 1, the first day of the fiscal year, Shiller Company borrowed $86,000 by giving a seven-year, 8% installment note to Soros Bank. The note requires
annual payments of $16,518, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $6,880 and principal
repayment of $9,638.
Required:
a. Journalize the entries to record the following transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW
journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will
automatically indent a credit entry when a credit amount is entered.
1. Issued the installment note for cash on the first day of the fiscal year.
2. Paid the first annual payment on the note.
b. Explain how the notes payable would be reported on the balance sheet at the end of the first year.
Transcribed Image Text:Instructions On January 1, the first day of the fiscal year, Shiller Company borrowed $86,000 by giving a seven-year, 8% installment note to Soros Bank. The note requires annual payments of $16,518, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $6,880 and principal repayment of $9,638. Required: a. Journalize the entries to record the following transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 1. Issued the installment note for cash on the first day of the fiscal year. 2. Paid the first annual payment on the note. b. Explain how the notes payable would be reported on the balance sheet at the end of the first year.
Chart of Accounts
CHART OF ACCOUNTS
Shiller Company
General Ledger
ASSETS
REVENUE
110 Cash
410 Sales
111 Petty Cash
610 Interest Revenue
121 Accounts Receivable
611 Gain on Redemption of Bonds
122 Allowance for Doubtful Accounts
126 Interest Receivable
EXPENSES
127 Notes Receivable
510 Cost of Merchandise Sold
515 Credit Card Expense
131 Merchandise Inventory.
Transcribed Image Text:Chart of Accounts CHART OF ACCOUNTS Shiller Company General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 121 Accounts Receivable 611 Gain on Redemption of Bonds 122 Allowance for Doubtful Accounts 126 Interest Receivable EXPENSES 127 Notes Receivable 510 Cost of Merchandise Sold 515 Credit Card Expense 131 Merchandise Inventory.
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