Question

On January 1, 2019 Eagle Company borrows $32,000 cash by signing a four year, 9% installment note. The note requires four equal payments of $9,877, 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.

Answer 1

Date	General Journal	Debit	Credit
Jan 01, 2019	Cash	$32,000
	Notes Payable		$32,000
Dec 31, 2019	Interest Expense	$2,880
	Notes Payable	$6,997
	Cash		$9,877
Dec 31, 2020	Interest Expense	$2,250
	Notes Payable	$7,627
	Cash		$9,877
Dec 31, 2021	Interest Expense	$1,564
	Notes Payable	$8,313
	Cash		$9,877
Dec 31, 2022	Interest Expense	$814
	Notes Payable	$9,063
	Cash		$9,877
Working
Period	Cash Payment	Interest Expense	Notes Payable	Ending Balance
Jan 01, 2019				$32,000
Dec 31, 2019	$9,877	$2,880	$6,997	$25,003
Dec 31, 2020	$9,877	$2,250	$7,627	$17,376
Dec 31, 2021	$9,877	$1,564	$8,313	$9,063
Dec 31, 2022	$9,877	$814	$9,063	$0