In Order to Expand Its Business,the Management of Carroll,Inc

question 57

Essay

In order to expand its business,the management of Carroll,Inc.issued a long-term notes payable for $50,000 on January 1,2016.The note will be paid over a 10-year period with equal annual principal payments,December 31 of each year.The annual interest rate is 12%.Prepare the journal entry for the first installment payment.

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Definitions:

Immunity

A provision or status that protects a person or entity from legal action or liability under certain conditions.

Drawee

The party directed by a drafter (e.g., the issuer of a check) to pay a certain sum of money to the party named in the document.

Dishonored

In relation to financial transactions, it refers to the refusal of payment on a check, note, or bill when presented.