Question

On January 1, 2019, Eagle Company borrows $25,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $7,381, consisting of accrued interest and principal on December 31 of each year from 2019 through 2022.

Prepare the journal entries for Eagle to record the note's issuance and the four payments. (Round your intermediate calculations and final answers to the nearest dollar amount.)

• Record the payment of the first installment payment of interest and principal on December 31, 2019.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31, 2019 Interest expense 1,750 Notes payable Cash

• Record the payment of the second installment payment of interest and principal on December 31, 2020.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31, 2020 Interest expense Notes payable Cash

• Record the payment of the third installment payment of interest and principal on December 31, 2021.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31, 2021 Interest expense Notes payable Cash

• Record the payment of the fourth installment payment of interest and principal on December 31, 2022.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31, 2022 Interest expense Notes payable Cash

Answer 1

Year Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Opening Balance (A) $25,000 $19,369 $13,344 $6,897 Interest Expense (B) = (A) x 7% $1,750 $1,356 $934 $484 Instalment payment (c) $7,381 $7,381 $7,381 $7,381 Closing Balance (A) + (B) - (C) $19,369 $13,344 $6,897 $0 Date Credit Debit $1,750 $5,631 $7,381 $1,356 $6,025 Account Title Dec 31, 2019 Interest Expense Notes Payable Cash Dec 31, 2020 Interest Expense Notes Payable Cash Dec 31, 2021 Interest Expense Notes Payable Cash Dec 31, 2022 Interest Expense Notes Payable Cash $7,381 $934 $6,447 $7,381 $484 $6,897 $7,381