$14 -1 Accounting for a long -term note payable Learning Objective 1 On January 1, 2018 , Lakeman -Fay signed a $1,500,000 , 15-year , 7% note . The loan required Lakeman -Fay to make annual payments on December 31 of $100,000 principal plus interest . Requirements 1. Journalize the issuance of the note on January 1, 2018 2. Journalize the first note payment on December 31, 2018 . E14 -18 Accounting for long-term notes payable transactions Learning Objective 1 Consider the following note payable transactions of Caleb Video Productions 2018 Oct. 1 Purchased equipment costing $80,000 by issuing a five -year , 8% note payable . The note requires annual principal payments of $16,000 plus interest each October Dec . 31 Accrued interest on the note payable 2019 Oct. 1 Paid the first installment on the note Dec . 31 Accrued interest on the note payable Requirements 1. Journalize the transactions for the company. S14 -3 Determining bond prices Learning Objective 2 Bond prices depend on the market rate of interest , stated rate of interest , and time . Determine whether the following bonds payable will be issued at face value , at a premium , or at a discount : a. The market interest rate is 8%. Idaho issues bonds payable with a stated rate of 7.75 6. b. Austin issued 9% bonds payable when the market interest rate was 8.25 %. c. Cleveland's Cars issued 10 % bonds when the market interest rate was 10%. d. Atlanta's Tourism issued bonds payable that pay the stated interest rate of 8.5%. At issuance, the market interest rate was 10.25 6