On January 1, Gemstone Company obtained a $165,000, 10-year, 7% installment note
ID: 2337221 • 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 Interest Expense for $11,550
credit to Interest Payable for $11,550
credit to Notes Payable for $165,000
debit to Notes Payable for $165,000
debit to Interest Expense for $11,550
credit to Interest Payable for $11,550
credit to Notes Payable for $165,000
debit to Notes Payable for $165,000
Explanation / Answer
Journal entry will be:
So answer will be: A. Debit to interest expense for $11,550
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Debit Interest expense $ 11,550 Debit note payable $ 11,942 Credit Cash $ 23,492