On January 1, Luther Co. issued a $1,000,000, 5 year, 8% installment note payable with payments of $200,000 principal plus interest due on January 1 of each year for the next 5 years.
1. Prepare the adjusting journal entry at December 31 to accrue interest for the year.
2. Show the accounts) and amounts) and where it will appear on a multi-step income statement prepared on December 31.
3. Show the accounts) and amounts) and where they will appear on a classified balance sheet prepared on December 31.

Question

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The Answer of On January 1, Luther Co. issued a $1,000,000, 5 year, 8% installment note payable with payments of $200,000 principal plus interest due on January 1 of each year for the next 5 years.
1. Prepare the adjusting journal entry at December 31 to accrue interest for the year.
2. Show the accounts) and amounts) and where it will appear on a multi-step income statement prepared on December 31.
3. Show the accounts) and amounts) and where they will appear on a classified balance sheet prepared on December 31.