Question

Exercise 9-2A Record Installment notes (LO9-2) On January 1, 2021, Tropical Paradise borrows $42.000 by agreeing to a 5%, four-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $967.23 are due at the end of each month with the first Installment due on January 31, 2021. Required: Record the Issuance of the Installment note payable and the first two monthly payments. (Do not round Intermediate calculations. Round your final answers to 2 decimal places. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction lat Journal entry worksheet Record the second monthly payment. Note: Enter debits before credits Date Credit General Journal February 28, 2021 Interest Expense Notes Payable Cash Debit 205.04 761.191 967.23 Record entry Clear entry View general Journal

Answer 1

JOURNAL ENTRY:

Date	Account title	debit	credit
February 28, 2021	Interest expense ($42000 - $792.23)x5%x(6/12) notes payable Cash	$171.70 $795.53 .	. . $967.23

note:

at the time of first installment payment, repayment of principal equals to:

= $967.23 - {(42000 x 5% x (6/12)}

= $967.23 - $175

= $792.23