The appropriate entries to record the issuance of the note payable for cash and the first monthly payment are: Debit Equipment $30,000
Credit Notes payable $30,000; Debit Notes payable $441.14, Debit Interest expense $125, Credit Cash $566.14.
Corvallis Carnivals Journal entries
January 1, 2024
Debit Equipment $30,000
Credit Notes payable $30,000
( To record issuance of the note payable)
January 30, 2024
Debit Notes payable $441.14
($566.14-$125)
Debit Interest expense $125
($30,000 × 5% × 1 / 12)
Credit Cash $566.14
(To record first monthly payment)
Therefore the entry is Debit Equipment $30,000, Credit Notes payable $30,000.
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The complete question is:
On January 1, 2024, Corvallis Carnivals borrows $30,000 to purchase a delivery truck by agreeing to a 5%, five-year loan with the bank. Payments of $566.14 are due at the end of each month, with the first installment due on January 31, 2024. Record the issuance of the note payable for cash and the first monthly payment.
