Question

On January 1, 2018, Eagle borrows $22,000 cash by signing a four-year, 6% installment note. The note requires four equal payments of $6,349, consisting of accrued interest and principal on December 31 of each year from 2018 through 2021. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations and final answers to the nearest dollar amount. Round all table values to 4 decimal places, and use the rounded table values in calculations.) Prepare the journal entries for Eagle to record the loan on January 1, 2018, and the four payments from December 31, 2018, through December 31, 2021.

Answer 1

		Debit	Credit
Jan 01,2018	Cash	22000
	Notes payable		22000
Dec 31,2018	Interest expense	1320		=22000*6%
	Notes payable	5029
	Cash		6349
Dec 31,2019	Interest expense	1018		=(22000-5029)*6%
	Notes payable	5331
	Cash		6349
Dec 31,2020	Interest expense	698		=(22000-5029-5331)*6%
	Notes payable	5651
	Cash		6349
Dec 31,2021	Interest expense	360		=(22000-5029-5331-5651)*6%
	Notes payable	5989
	Cash		6349