On January 1, Gemstone Company obtained a $165,000, 10-year, 7% installment note
ID: 2334097 • Letter: O
Question
On January 1, Gemstone Company obtained a $165,000, 10-year, 7% installment note from Guarantee Bank. The note requires annual payments of $23,492, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $11,550 and principal repayment of $11,942. The journal entry to record the issuance of the installment note for cash on January 1 would include a
debit to Notes Payable for $165,000
credit to Interest Payable for $11,550
debit to Interest Expense for $11,550
credit to Notes Payable for $165,000
a.debit to Notes Payable for $165,000
b.credit to Interest Payable for $11,550
c.debit to Interest Expense for $11,550
d.credit to Notes Payable for $165,000
Explanation / Answer
Option d. credit to Notes Payable for $165,000 is correct answer.
Date Accounts Title Debit Credit January 1 Cash $165,000 Notes Payable $165,000