InstructionsOn 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 requiresannual 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 principalrepayment 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. CNOWjournals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals willautomatically 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 AccountsCHART OF ACCOUNTSShiller CompanyGeneral LedgerASSETSREVENUE110 Cash410 Sales111 Petty Cash610 Interest Revenue121 Accounts Receivable611 Gain on Redemption of Bonds122 Allowance for Doubtful Accounts126 Interest ReceivableEXPENSES127 Notes Receivable510 Cost of Merchandise Sold515 Credit Card Expense131 Merchandise Inventory.

Notes payable is a form of amount borrowed or taken out from some other person. This is a liability…

Answered: On January 1, the first day of the…

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 the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a seven-year, 7% installment note to Soros Bank. The note requires annual payments of $15,772, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $5,950 and principal repayment of $9,822. a. Journalize the entries to record the following: 1. Issued the installment note for cash on the first day of the fiscal year. If an amount box does not require an entry, leave it blank. - Select - - Select - - Select - - Select - 2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. - Select - - Select - - Select - - Select - - Select - - Select - b. Explain how the notes payable would be reported on the balance sheet at the end of the first year. Notes payable are reported as liabilities on the balance sheet. The portion of the note…
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