On the first day of the fiscal year, Shiller Company borrowed $85,000 by giving a sevenâyear, 7% installment note to Soros Bank. The note requires annual payments of $15,772, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $5,950 and principal repayment of $9,822.

Journalize the entries to record the following:

a. Issued the installment note for cash on the first day of the fiscal year.
b. Paid the first annual payment on the note.