Chapter 10 Practice Problems Problem #4 - Installment Notes 1) Prepare the journal entry for the issuance of the note payable, 2) Calculate the interest expense & note payable amount due in Year 1 3) Prepare the journal entry for the first payment in Year 1. 4) Calculate the ending note payable balance, 5) Prepare the journal entries for Year 2 6) Calculate the interest expense & note payable amount due in Year 2, 7) Calculate the ending note payable balance, The Table below includes information related to an installment note issued for cash on January 1, 2018 $ Principal Amount Interest Rate Term of Note Annual Payments (includes principal & interest) 24.000 6% 5 years $ 5,698 Year 1 Date Accounts br Cr To record the receipt of cash in exchange for a note Calculation of Interest expense Calculation of Notes payable! Year 1 Date Accounts Dr Cr To record the first payment on the installment note, Calculation of Ending Note Payable Balance: Year 2 Calculations & Journal Entries Calculation of Interest expense for Year 2: Calculation of Notes payablet Year 2 Date Accounts Dr Cr To record the second installment payment, Calculation of Ending Note Payable Balance