On January 1, Yeargan Company Obtained a $125,000, 7-Year 5

Essay

On January 1, Yeargan Company obtained a $125,000, 7-year 5% installment note from Farmers Bank. 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.

Requirement:

1 Journalize the following entries:
a. Issued the installment notes for cash on January 1.
b. Paid the first annual payment on the note.