Entries for Installment Note Transactions On January 1, Year 1, Luzak Company issued a $33,000, 4-year, 8% installment note to McGee Bank. The note requires annual payments of $9,963, beginning on December 31, Year 1. Journalize the entries to record the following: Year 1 Jan. 1 Issued the note for cash at its face amount. Dec. 31 Paid the annual payment on the note, which consisted of interest of $2,640 and principal of $7,323. Year 4 Dec. 31 Paid the annual payment on the note, including $738 of interest. The remainder of the payment reduced the principal balance on the note.