On March 1,2018,Vintage Services issued an 8% long-term notes payable for $22,000.It is payable over a 16-year term in $1,375 principal installments on March 1 of each year,beginning March 1,2019.Each yearly installment will include both principal repayment of $1,375 and interest payment for the preceding one-year period.The journal entry to pay the first installment will include a debit to Interest Expense for $1,760.

Question

Quizplus · Accepted Answer

The first installment includes interest for the period from March 1, 2018, to March 1, 2019, which is $22,000 x 8% x 1 year = $1,760.

On March 1,2018,Vintage Services Issued an 8% Long-Term Notes Payable