Littor Industries issued a $100,000, 4-year, 11% note at face value to Forest Hills Bank on January 1, 2005, and received $100,000 cash. The notes requires annual interest payments each December 31.
Prepare Littor's journal entries to record:
(a) the issuance of the note and
(b) the December 31 interest payment.
a) Issuance of note
Jan 1, 2005
DR Cash $100,000
Guidelines are provided on how to prepare journal entries for Littor Industries.