Question

On January 1, 2017, Eagle borrows $30,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $8,857, consisting of accrued interest and principal on December 31 of each year from 2017 through 2020. (Round your intermediate calculations and final answers to the nearest dollar amount.) Prepare the journal entries for Eagle to record the loan on January 1, 2017, and the four payments from December 31, 2017, through December 31, 2020. View transaction list Journal entry worksheet Eagle borrows $30,000 cash by signing a four-year, 7% installment note. Record the issuance of the note on January 1, 2017. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01, 2017

Answer 1

Answer

• Journal Entries

Date	Accounts title	Debit	Credit
01-Jan-17	Cash	$30,000
	Notes Payable		$30,000
	(to record issuance)
31-Dec-17	Interest Expense	$2,100
	Notes Payable	$6,757
	Cash		$8,857
	(Payment #1)
31-Dec-18	Interest Expense	$1,627
	Notes Payable	$7,230
	Cash		$8,857
	(Payment #2)
31-Dec-19	Interest Expense	$1,121
	Notes Payable	$7,736
	Cash		$8,857
	(Payment #3)
31-Dec-20	Interest Expense	$580
	Notes Payable	$8,277
	Cash		$8,857
	(Payment #4)

• For amounts, refer to below WORKINGS

Date	Beginning Principal amount	Cash paid	Interest Expense	Principal paid	Ending Principal Balance
	[A]	[B]	[C = A x 7%]	[D = B - C]	[E = A - D]
01-Jan-17					$30,000
31-Dec-17	$30,000	$8,857	$2,100	$6,757	$23,243
31-Dec-18	$23,243	$8,857	$1,627	$7,230	$16,013
31-Dec-19	$16,013	$8,857	$1,121	$7,736	$8,277
31-Dec-20	$8,277	$8,857	$580	$8,277	$0