Question

Journalizing Installment Notes On the first day of the fiscal year, a company issues $71,000, 11%, six-year installment notes that have annual payments of $17,783. The first note payment consists of $7,810 of interest and $9,973 of principal repayment. a. Journalize the entry to record the issuance of the installment notes b. Journalize the first annual note payment. For a compound transaction, If an amount box does not require an entry, leave it blank

Answer 1

Debit 1000 credit $ Cash / Bank Noles payable $ 71000 Noles payable Interest Expense cash (Bank $99+3 $7810 $17783 2 Times interest earned = Earnings before intereste tex Interest Expense 3635600 +298000 208000 = 13.2 times. current year = - Prior year = 4148160 + 357600 357600 = 12.6 times. 6 It is improving from prior year since he has given Income before income fare, but we need income before tone and interest. we have to add back the interest expenses. to in come before ton.

7 Issue of bonds drasld - Cash / Bank $5230630 Discount om Bonds payable $ 369370 Bonds payable B5600000 I The Difference amount is I brelod bonds payable to discount on