On January 1,2015,a $60,000,6%,6-year installment note payable is issued by the Terry Corporation.The note requires that $10,000 of principal plus accrued interest be paid at the end of each year (December 31).The journal entry to record the second annual payment would include:

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The interest expense for the second year is calculated on the remaining principal after the first payment. The initial principal is $60,000, and after the first $10,000 principal payment, it becomes $50,000. The interest for the second year is 6% of $50,000, which is $3,000.

On January 1,2015,a $60,000,6%,6-Year Installment Note Payable Is Issued by the Terry