Question

On January 1, 2021, Julee Enterprises borrows $31,000 to purchase a new Toyota Highlander by agreeing to a 8%, 4-year note with the bank. Payments of $756.80 are due at the end of each month with the first installment due on January 31, 2021.

Record the issuance of the note payable and the first two monthly payments. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

January 1, 2021, received loan from bank to purchase a Toyota Highlander.

Dr Toyota Highlander 31,000

Cr Notes payable 31,000

January 31, 2021, first installment paid on bank loan (8% interest rate)

Dr Interest expense 203.84

Dr Notes payable 552.96

Cr Cash 756.80

interest expense = $31,000 x 8% x 30/365 = $203.84

February 28, 2021, second installment paid on bank loan (8% interest rate)

Dr Interest expense 186.85

Dr Notes payable 569.95

Cr Cash 756.80

interest expense = ($31,000 - $552.96) x 8% x 28/365 = $186.85