On the first day of the fiscal year, a company issues $35,000, 9%, five-year installment notes that have annual payments of $8,998. The first note payment consists of $3,150 of interest and $5,848 of principal repayment.
Journalize the following transactions. Be sure to include the year in the date for both entries. Refer to the Chart of Accounts for exact wording of account titles.
2016
Jan. 1 Installment notes are issued
2017
Jan. 1 First annual note payment is made