Question

Coldwell, Inc. issued a \(100,000. 4-years, 10% note at face value to Flint Hills Bank on January 1, 2017, and received \)100,000 cash. The note requires annual interest payments each December 31. Prepare Coldwell’s journal entries to record (a) the issuance of the note and (b) the December 31 interest payment.

Short answer

The total for both debit and creditsides is $110,000.

Step-by-step solution

Meaning of the Journal Entry

The journal entry is the act ofkeeping a record of any transactions and events, either economic or non-economic. Therecording of journal entry includes Serial number or transaction number, Date, Accounts titles and explanations, debit and credit, and narrations.

Journal Entries

Journal Entries
Date	Accounts Titles and explanations	Debit	Credit
Jan 1, 2017	Cash	$100,000
	Notes payable		$100,000
Dec31,2017	Interest Expenses	$10,000
	Cash		$10,000

Working notes:

Notes payable = $100,000 (Given)

Interest expense = ($ 100,000 × 10%) = $ 10,000