Question

Sweet Corporation purchased a computer on December 31, 2016, for $132,300, paying $37,800 down and agreeing to pay the balance in five equal installments of $18,900 payable each December 31 beginning in 2017. An assumed interest rate of 9% is implicit in the purchase price.

Prepare the journal entry at December 31, 2018, to record the payment and interest (effective-interest method employed). (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

• All working forms part of the answer
• In cases like these, please also PROVIDE the LIST OF ACCOUNT to choose from if possible.
• Journal entry will involve some amounts that are needed to be computed first.

The same are calculated in following amortisation schedule

Date	Beginning Balance Notes Payable	Interest Expense at 9%	Principal amount	Amount repaid	Ending balance of Notes payable
31-Dec-16					$                94,500
31-Dec-17	$                           94,500	$                          8,505	$                        18,900	$ 27,405	$ 75,600
31-Dec-18	$ 75,600	$ 6,804	$                        18,900	$ 25,704	$                56,700

• All journal entries till Dec 31 2018

---You only need Dec 31 2018 entry

Date	Accounts title	Debit	Credit
31-Dec-18	Interest Expense	$                          6,804
	Notes Payable	$                        18,900
	Cash		$                        25,704
	(#2 Installment paid)