Journalize the first payment on December 31, 2018.

Question: On January 1, 2018, Fox Corporation signed an $80,000, four-year, 4% note. The loan required Fox to make payments annually

on December 31 of $20,000 principal plus interest.

1. Journalize the issuance of the note on January 1, 2018.

2. Journalize the first payment on December 31, 2018.

Solutions

Expert Solution

Step 1: Definition of notes payable

The notes payable is a type of long-term liability in which a contract is signed between two parties.

Step 2: Journal entries of notes payable

Date	Particulars	Debit	Credit
January 1, 2018	Cash	$80,000
	Notes Payable		$80,000
	(Receive cash from notes at 5%)

December 31, 2018	Notes Payable	$20,000
	Interest Expense	$3,200
	Cash		$23,200
	(Being first payment of principal plus interest is made)

The amount paid on the first payment of the note payable is $23,200.

Sahil Dangi answered 2 years ago

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