On January 1, Yeargan Company obtained a $125,000, 7-year 5% installment note from Farmers Banks. The note requires annual payments of $21,602, with the first payment occurring on the last day of the fiscal year. The first payment consists of $6,250 interest and principal repayment of $15,352.
Journalize the following entries:
(a) Issued the installment notes for cash on January 1
(b) Paid the first annual payment on the note
