Harris company borrowed 65,000 by giving 10 year , 6% installment note to Cuba Bank The note requires annual payments of $8832 first payment occuring on the last day of the fiscal year. the first payment consists of interest of $3,900 and principal repayment of $4932,
Issued the installment note for cash on the first day of the fiscal year
Paid the first annual payment on the note. For a compount transcation,
I am having problems with the journal entries
To answer this question, we need to calculate the interest and principal components of the first annual payment on the installment note.
Given information:
Principal borrowed: $65,000
Interest rate: 6%
Installment period: 10 years
Annual payment: $8,832
First payment components: Interest = $3,900, Principal repayment = $4,932
To calculate the interest and principal repayment components of the first annual payment, we can use the formula:
Annual payment = Interest + Principal repayment
Step 1: Calculate the interest component:
Interest = First payment - Principal repayment
Interest = $3,900
Step 2: Calculate the principal repayment component:
Principal repayment = First payment - Interest
Principal repayment = $4,932
Now that we have the interest and principal repayment components, we can proceed to the next part of the question.
"Paid the first annual payment on the note. For a compound transaction,"
From the context, it seems that you are referring to a compound transaction related to the payment of the installment note. However, the information provided does not specify what compound transaction is being referred to. If you can provide more details or clarify the specific compound transaction, I can assist you further.