On the first day of the fiscal year, Hammond Company obtained a $ 44,000, seven-year, 5% installment note from Vegas Bank. The note requires annual payments of $7,604, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $2,200 and principal repayment of $5,404.
(a) Journalize the entries to record the following:
1. Issued the installment notes for cash on the first day of the fiscal year.
2. Paid the first annual payment on the note.
(b) Determine the amount of bond interest expense for the first year.