EX 14-11 Entries for installment note transactions

On January 1, 2014, O’Brien Company issued a $210,000, six-year, 9% installment note to Bulldog Bank. The note requires annual payments of $46,813, beginning on December 31, 2014. Journalize the entries to record the following:

2014
Jan. 1. Issued the notes for cash at their face amount.
Dec. 31. Paid the annual payment on the note, which consisted of interest of $18,900 and principal of $27,913.

2017
Dec. 31. Paid the annual payment on the note, included $10,665 of interest. The remainder of the payment reduced the principal balance on the note.


Answer:

2014
Jan. 1 CasQh 210,000
Notes Payable 210,000
Dec. 31 Interest Expense 18,900
Notes Payable 27,913
Cash 46,813
2017
Dec. 31 Interest Expense 10,665
Notes Payable* 36,148
Cash 46,813
*$46,813 – $10,665