On January 1, Year 1, Wedekind Company issued a $170,000, five-year, 8% installment note to Shannon Bank. The note requires annual payments of $42,578, beginning on December 31, Year 1. Journalize the entries to record the following:

Year 1

Jan. 1. Issued the note for cash at its face amount.

Dec. 31. Paid the annual payment on the note, which consisted of interest of $13,600 and principal of $28,978.

Year 4

Dec. 31. Paid the annual payment on the note, including $6,074 of interest. The remainder of the payment reduced the principal balance on the note.