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Question
On January 1, Yeargan Company obtained a $125,000, 5%, 7-year installment note from Farmers Bank. The note requires annual payments of $21,602, with the first payment occurring on the last day of the fiscal year. The first payment consists of $6,250 interest and principal repayment of $15,352.
Journalize the following transactions:
a. Issued the installment note for cash on January 1.
b. Paid the first annual payment on the note.
Answer
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