On January 1, Year 1, Stratton Company borrowed $140,000 on a 10-year, 6% installment note payable....

On January 1, Year 1, Stratton Company borrowed $140,000 on a 10-year, 6% installment note payable. The terms of the note require Stratton to pay 10 equal payments of $19,022 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is:

Multiple Choice

Debit Interest Expense $8,400; debit Notes Payable $10,622; credit Cash $19,022.
Debit Notes Payable $140,000; debit Interest Expense $5,022; credit Cash $19,022.
Debit Notes Payable $8,400; debit Interest Expense $10,622; credit Cash $19,022.
Debit Interest Expense $7,763; debit Notes Payable $11,259; credit Cash $19,022.
Debit Notes Payable $19,022; credit Cash $19,022.

Expert Solution

Amortization schedule for installment note payable
	Beginning Balance	Principal Payment	Interest Expense	Total Payment	Ending Balance
January 1, Year 1					140000
December 31, Year 1	140000	10622	8400	19022	129378
December 31, Year 2	129378	11259	7763	19022	118119

Answer: Debit Interest Expense $7,763; debit Notes Payable $11,259; credit Cash $19,022.

ekkarill92 answered 2 years ago

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