Problem - On January 1, Luther Co. issued a $1,000,000, 5 year, 8% installment note payable with payments of $250,456 principal plus interest due on January 1 of each year for the next 5 years.
Required:
1. Prepare the adjusting journal entry at December 31 to accrue interest for the year. Refer to the Chart of Accounts for exact wording of account titles.
2. Show the account(s) and amount(s) and where it will appear on a multi-step income statement prepared on December 31.
3. Show the account(s) and amount(s) and where they will appear on a classified balance sheet prepared on December 31.
Final Question: Show the account(s) and amount(s) and where it will appear on a multi-step income statement prepared on December 31.