Answer and Explanation:
The journal entries are shown below:
1. Cash Dr $175,000
To note payable $175,000
(being note payable is issued)
2. Interest expense Dr (8% of $175,000) $14,000
To interest payable $14,000
(being interest expense is recorded)
3. Interest payable $14,000
Note payable $29,830
To cash $43,830
(being cash paid is recorded)
4. Interest expense $6,253
To interest payable $6,253
(being interest expense is recorded)
5. Interest payable $6,253
Note payable $37,577
To cash $43,830
(being cash paid is recorded)
