Question

Chapter 14 Long-Term Liabilities Use the information in Exercise 14-10 to prepare the journal entries for Eagle to record the loan on January 1, 2017, and each of the four payments from December 31, 2017, through December 31, 2020. ries Mentel

Answer 1

Solution:

Journal Entries:

Date	Accounts and Explanation	Debit	Credit
1/1/2017	Cash	$                100,000
	Notes Payable		$        100,000
	(Being notes payable)
31/12/2017	Interest Expense	$                     7,000
	Notes Payable	$                   22,523
	Cash		$          29,523
	( Being interest expense paid along with principal)
31/12/2018	Interest Expense	$                     5,423
	Notes Payable	$                   24,100
	Cash		$          29,523
	( Being interest expense paid along with principal)
31/12/2019	Interest Expense	$                     3,736
	Notes Payable	$                   25,787
	Cash		$          29,523
	( Being interest expense paid along with principal)
31/12/2020	Interest Expense	$                     1,932
	Notes Payable	$                   27,591
	Cash		$          29,523
	( Being interest expense paid along with principal)

Amortization Table for Installment:

Date	Installments Paid	Interest Expense	Principal Repayment	Carrying Amount of Bonds
1/1/2017				$                                   100,000
31/12/2017	$              29,523.00	$                       7,000	$                      (22,523)	$                                      77,477
31/12/2018	$              29,523.00	$                       5,423	$                      (24,100)	$                                      53,377
31/12/2019	$              29,523.00	$                       3,736	$                      (25,787)	$                                      27,591
31/12/2020	$              29,523.00	$                       1,932	$                      (27,591)	$                                              (0)

Notes:

1) Final year interest is adjusted with $1, in order to arrive at exact $ 0.