Question

Requirement 1. Journalize the transactions for the company. (Record debits first, then credits. Select explanations on the last line of the journal entry.) Oct. 1, 2018: Purchased equipment costing $80,000 by issuing a five-year, 8% note payable. The note requires annual principal payments of $16,000 plus interest each October 1. Accounts and Explanation Credit Date Debit 2018 Equipment 80,000 Oct. 1 Notes Payable 80,000 Purchased equipment by issuing a 5-year, 8% note.

Answer 1

Date	Account	Debit	Credit
Oct 1	Interest expense (80,000*8%*9/12)	4,800
	Interest payable	1,600
	Notes payable	16,000
	Cash		22,400
	(to record first installment paid)

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