On January 1, Yeargan Company obtained a $125,000, 7-year 5% installment note from Farmers Bank. The note requires annual payments of $21,602, with the first payment occurring on the last day of the fiscal year. The first payment consists of $6,250 interest and principal repayment of $15,352. Journalize the following entries:Required:

a.	Issued the installment note for cash on January 1.*
b.	Paid the first annual payment on the note.*
	*Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTSYeargan CompanyGeneral Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Notes Receivable
115	Interest Receivable
121	Inventory
122	Supplies
131	Prepaid Insurance
140	Land
151	Building
152	Accumulated Depreciation-Building
153	Equipment
154	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Salaries Payable
231	Sales Tax Payable
241	Notes Payable
242	Interest Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
310	Katy Yeargan, Capital
311	Katy Yeargan, Drawing

	REVENUE
410	Sales
610	Interest Revenue
611	Gain on Redemption of Bonds

	EXPENSES
510	Cost of Goods Sold
511	Bad Debt Expense
512	Credit Card Expense
513	Cash Short and Over
521	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Rent Expense
535	Insurance Expense
536	Supplies Expense
551	Depreciation Expense-Building
552	Depreciation Expense-Equipment
590	Miscellaneous Expense
710	Interest Expense
711	Loss on Redemption of Bonds

a. Issued the installment note for cash on January 1. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

b. Paid the first annual payment on the note on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3