On January 31, 2024, Patty's Pasties records the issuance of a $15,000, 6%, four-year loan for a delivery truck. The first monthly payment of $352.28 is debited to Cash and Interest Expense, with a credit to Notes Payable.
Here's the journal entry for Patty's Pasties on January 31, 2024, to record the issuance of the installment note payable and the first monthly payment:
Date | General Journal | Debit | Credit
January 31, 2024 | Delivery Truck (Asset) | $15,000
| Notes Payable (Liability) | $15,000
| Cash (Asset) | $352.28|
| Interest Expense (Expense) | $90.00 |
| Notes Payable (Liability) | $262.28
- Patty's Pasties records the acquisition of the delivery truck by debiting the Delivery Truck account for $15,000 and crediting Notes Payable for the same amount.
- The first monthly payment of $352.28 is then recorded by debiting Cash for $352.28, recognizing $90.00 as Interest Expense (calculated as 6% of the remaining balance of $15,000), and crediting Notes Payable for the remaining amount of $262.28.