Question 169
Multiple Choice A corporation borrowed $125,000 cash by signing a 5-year,9% installment note requiring annual payments each December 31 of accrued interest plus equal amounts of principal.What journal entry would the issuer record for the first payment?
Interest Expense 2 , 250 Notes Payable 25 , 000 Cash 27 , 250 \begin{array} { | c | r | r | } \hline \text { Interest Expense } & 2,250 & \\\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 27,250 \\\hline\end{array} Interest Expense Notes Payable Cash 2 , 250 25 , 000 27 , 250 Notes Payable 27 , 250 Interest Payable 2 , 250 Cash 25 , 000 \begin{array} { | l | r | r | } \hline \text { Notes Payable } & 27,250 & \\\hline \text { Interest Payable } & & 2,250 \\\hline \text { Cash } & & 25,000 \\\hline\end{array} Notes Payable Interest Payable Cash 27 , 250 2 , 250 25 , 000 Interest Expense 11 , 250 Notes Payable 25 , 000 Cash 36 , 250 \begin{array} { | c | r | r | } \hline \text { Interest Expense } & 11,250 & \\\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 36,250 \\\hline\end{array} Interest Expense Notes Payable Cash 11 , 250 25 , 000 36 , 250 Notes Payable 25 , 000 Cash 25 , 000 \begin{array}{|c|r|r|}\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 25,000 \\\hline\end{array} Notes Payable Cash 25 , 000 25 , 000 Notes Payable 11 , 250 Cash 11 , 250 \begin{array} { | c | r | r | } \hline \text { Notes Payable } & 11,250 & \\\hline \text { Cash } & & 11,250 \\\hline\end{array} Notes Payable Cash 11 , 250 11 , 250
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