Question

On January 1, 2019, Eagle Company borrows $23,000 cash by signing a four-year, 9% installment note. The note requires four equal payments of $7,099, consisting of accrued interest and principal on December 31 of each year from 2019 through 2022. Prepare the journal entries for Eagle to record the note's issuance and the four payments

Answer 1

See below

Step-by-step explanation:

January 01, 2019

Cash Dr $23,0000

______________Notes payable Cr $23,000

December 31, 2019

Interest expense Dr $2,070

($23,000 × 9%)

Notes payable Dr $5,029

____________________Cash Cr. $7,099

December 31, 2020

Interest expense Dr $1,617

($23,000 - $5,029) × 9%

Notes payable Dr $5,082

_________________ Cash Cr $7,099

December 31, 2021

Interest expense Dr $1,160

($23,000 - $5,029 - $5,082) × 9%

Notes payable Dr $5,939

___________________ Cash Cr $7,099

December 31, 2022

Interest expense Dr $626

($23,000 - $5,029 - $5,082 - $5,939) × 9%

Note payable Dr $6,473

_____________________ Cash Cr $7,099