A partial amortization schedule for a note payable with interest paid annually that was issued on January $1,$ Year $1,$ is shown next:

Accounting PeriodPrincipal balance January $1$Cash PaymentApplied to InterestApplied to PrincipalYear $1$$ $400,000$$ $50,000$$ $16,000$$ $34,000$

Required:

What is the annual rate of interest charged on this loan?

Using the financial statements model, record the appropriate amounts for the following two events:

$(1)$ January $1,$ Year $1,$ issue of the note payable.$(2)$ December $31,$ Year $1,$ payment on the note payable.