On January 1,a company borrowed $50,000 cash by signing a 7% installment note that is to be repaid in 5 annual end-of-year payments of $12,195.The first payment is due on December 31.Prepare the journal entries to record the first and second installment payments.

Installment Note

A debt instrument that requires a series of payments over time, often including both interest and principal.

Annual End-Of-Year

A term typically referring to financial transactions or reports that are calculated, summarized, or finalized at the end of the fiscal year.

Journal Entries

Records of financial transactions in the accounting system, detailing the accounts affected and whether they are debits or credits.