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Question
On January 1, Gemstone Company obtained a $165,000, 7%, 10-year installment note from Guarantee Bank. The note requires annual payments of $23,492, with the first payment occurring on December 31. The first payment consists of interest of $11,550 and principal repayment of $11,942. The journal entry for the payment would include a
a. debit to Cash for $11,942
b. credit to Interest Payable for $11,550
c. debit to Notes Payable for $11,942
d. debit to Interest Expense for $23,492
Answer
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