On January 1, 2015, Corvallis Carnivals borrows $29,000 to purchase a delivery truck by agreeing...
Question:
On January 1, 2015, Corvallis Carnivals borrows $29,000 to purchase a delivery truck by agreeing to a 6%, four-year loan with the bank. Payments of $681.07 are due at the end of each month, with the first instalment due on January 31, 2015.
Required:
1. January 1, 2015: Record the issuance of the notes payable.
2, January 31 2015: Record the first monthly payment
Notes Payable
The note payable are the long term liabilities which are being paid of during a period of more than one year. It can be paid in installment or it can be paid in lump sum along with the interest. Interest on this debts is a n expense to the organisation. On issue of such debt the cash account is debited and the note payable account is credited.
Answer and Explanation: 1
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| Date | Account Titles | Debit | Credit |
|---|---|---|---|
| 1 Jan 2015 | Cash | $29000 | |
| Notes Payable | $29000 | ||
| Issued a note payable of $29000 of 6% | |||
| 31 Jan 2015 | Interest on note... |
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