Notes Payable Payments Journal Entry – Payment on Installment Note Using Amortization

Notes payable payments journal entry will enter the journal entry for making a payment on an installment note using an amortization table. We will enter the transaction in the general journal, post it to the general ledger, and see the effect on the trial balance. To record a financial transaction for the payment of an installment note we need an amortization table to determine the amount allocated to interest and the amount allocated to principle. Although the payment amount will often not change on an installment note, the amount allocated to interest and principle will change with each payment. We will enter a journal entry debiting interest expense, debiting notes payable, and crediting cash. The accounting transaction for payment on installment not will decrease cash, increase expenses, decrease the principal portion of the note, bring net income down, and bring total equity down.
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