Question

On January 1, 2019, Brooks Inc. borrows $90,000 from a bank and signs a 5% installment note requiring four annual payments of $25,381. The first installment payment is made on December 31.

Required:
Write down the necessary journal entry

Answer 1

Date General Journal Debit Credit

12/31 Interest Expense (90,000 x 5%) $4,500

Notes Payable (Bal. Figure) $20,881

Cash $25,381