Question

On January 1, 2019, Brooks Inc. borrows $90,000 from a bank and signs a 5% installment note requiring four annual payments of $25,381. The first installment payment is made on December 31.

Required:
Write down the necessary journal entry

Answer 1

Answer:

Date     General Journal                                Debit        Credit

12/31     Interest Expense (90,000 x 5%)     $4,500

            Notes Payable (Bal. Figure)             $20,881

                     Cash                                                          $25,381