On the first day of the fiscal year, Shiller Company borrowed $63,000 by giving a five-year, 12% installment note to Soros Bank. The note requires annual payments of $17,773, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $7,560 and principal repayment of $10,213. Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year.

Question

Harper Ellis

Business

22 April, 20:13

On the first day of the fiscal year, Shiller Company borrowed $63,000 by giving a five-year, 12% installment note to Soros Bank. The note requires annual payments of $17,773, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $7,560 and principal repayment of $10,213. Journalize the entries to record the following: a1. Issued the installment note for cash on the first day of the fiscal year.

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Kaylin Ryan · Answer 1

Bank A/c Dr $63,000

To Notes Payable $63,000

(Being the issuance of the installment note for cash is recorded)

Explanation:

The journal entry is shown below:

Bank A/c Dr $63,000

To Notes Payable $63,000

(Being the issuance of the installment note for cash is recorded)

For recording this transaction, we debited the bank account as it increased the assets account and at the same time it decreased the liabilities so the notes payable is credited