On January 1, 2021, Corvallis Carnivals borrows $30,000 to purchase a delivery truck by agreeing to a 5%, five-year loan with the bank Payments of $566.14 are due at the end of each month, with the first installment due on January 31, 2021

Record the issuance of the note payable and the first monthly payment.

Record the issuance of the note payable.

1. Jan 01, 2021

Dr Equipment $30,000

Cr Notes Payable $30,000

2. Jan 30, 2021

Dr Notes Payable $441.14

Dr Interest Expense $125.00

($30,000 x 5% x 1/12)

Cr Cash $566.14

Explanation:

Corvallis Carnivals

1. The Record of the issuance of the note payable and the first monthly payment will be to Debit Equipment with $30,000 and Credit Notes Payable with the same amount.

2. The Record of the issuance of the note payable will be to Debit Notes Payable with $441.14 ($566.14-$125) and Debit Interest Expense with $125.00 ($30,000 x 5% x 1/12) while Cash will be credited with $566.14