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Question
On the first day of the fiscal year, Hawthorne Company obtained an $88,000, 5%, 7-year installment note from Seaside Bank. The note requires annual payments of $15,208, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $4,400 and principal repayment of $10,808. The journal entry Hawthorne would make for the first annual payment due on the note would include a
a. debit to Cash for $15,208
b. credit to Notes Payable for $10,808
c. debit to Interest Expense for $4,400
d. debit to Notes Payable for $15,208
Answer
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