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29 June, 10:23

On the first day of the fiscal year, Hawthorne Company obtained an $88,000, seven-year, 5% installment note from Sea Side Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would record to make the first annual payment due on the note would include a:

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  1. 29 June, 13:55
    0
    DR - Interest expense - $4,400

    Explanation:

    DR - Interest expense - $4,400

    DR - Notes payable - $10,808

    CR - Bank/Cash - $15,208
  2. 29 June, 14:12
    0
    Notes Payable will be debited by $10,808

    Interest expense will be debited by $4,400

    Cash will be credited by $15,208
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