Question

Entries for Installment Note Transactions

On the first day of the fiscal year, Shiller Company borrowed $36,000 by giving a four-year, 8% installment note to Soros Bank. The note requires annual payments of $10,942, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $2,880 and principal repayment of $8,062.

Journalize the entries to record the following:

a1.  Issued the installment note for cash on the first day of the fiscal year.

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a2.  Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank.

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b. How would the notes payable be reported on the balance sheet at the end of the fiscal year?

Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year. a2. Paid the first annual payment on the note. If an amount box does not require an entry, leave it blank. The portion of the note payable that is due within one year is reported as a current liability. The remaining portion of the note payable that is not due wit The entire amount of notes payable is shown as current liability. The entire amount of notes payable is shown as long-term liability. The portion of the note payable that is due within one year is reported as an expense. The remaining portion of the note payable that is not due within

Answer 1

a1 36,000 Cash Notes payable 36,000 a2 Note payable Interest expense Cash 8,062 2,880 10,942 b The portion of the note payable that is due within 1 year is reported as a current liability The remaining portion of the note payable that is not due within 1 year is reported as a lon-term liability