Business, 16.03.2020 18:01 kdd46

"On January 1, 2019, Eagle Company borrows $100,000 cash by signing a four-year, 7% installment note. The note requires four equal payments of $29,523, consisting of accrued interest and principal on December 31 of each year from 2019 through 2022."

Required:
Prepare the journal entries for Eagle to record the note's issuance and each of the four payments.

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Answer from: palcochran1313

Journal Entries:

Date Particulars Debit Credit

Jan. 1, 2019 Cash $100,000

Notes Payable $100,000

Dec. 31, 2019 Interest Expenses 7,000

Notes Payable 22,523

Cash 29,523

Dec. 31, 2020 Interest Expenses 5,423

Notes Payable 24,100

Cash 29,523

Dec. 31, 2021 Interest Expenses 3,736

Notes Payable 25,787

Cash 29,523

Dec. 31, 2022 Interest Expenses 1,931

Notes Payable 27,592

Cash 29,523

Note: It should be kept in mind that the Interest Expenses is calculated by taking the Balance of Notes Payable, and multiplying it with 7%.

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Answer from: Quest

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