A corporation borrowed $125,000 cash by signing a 5-year, 9% installment note requiring equal annual payments each December 31 of $32,136. What journal entry would the issuer record for the first payment

Dr interest expense   $11,250.00

Dr loan payable           $20,886.00

Cr cash                                               $32,136.00

Explanation:

We need to ascertain the interest element of the first year payment of $32,136.

interest on first payment=$125,000*9%=$11,250.00  

Principal's portion of repayment=$32,136.00-$11,250.00=$20,886.00  

The double entries for the repayment would a debit of $20,886.00  and $11,250.00  to loan payable and interest expense while cash is credited with $32,136.00

false! basically!

i hope i'm correct.