On January 1, Year 1, Luzak Company issued a $69,000, 4-year, 9% installment note to McGee Bank. The note requires annual payments of $21,298, beginning on December 31, Year 1.
Journalize the entries to record the following:
| Year 1 | |
| Jan. 1 | Issued the note for cash at its face amount. |
| Dec. 31 | Paid the annual payment on the note, which consisted of interest of $6,210 and principal of $15,088. |
| Year 4 | |
| Dec. 31 | Paid the annual payment on the note, including $1,759 of interest. The remainder of the payment reduced the principal balance on the note. |
Issued the note for cash at its face amount.
| Year 1, Jan. 1 | Cash | ||
| Notes Payable |
Paid the annual payment on the note, which consisted of interest of $6,210 and principal of $15,088. For a compound transaction, if an amount box does not require an entry, leave it blank.
| Year 1, Dec. 31 | |||
Paid the annual payment on the note, including $10,665 of interest. The remainder of the payment reduced the principal balance on the note. For a compound transaction, if an amount box does not require an entry, leave it blank.
| Year 4, Dec. 31 | |||
