A Five-Year, 4%, $80,000 Note Payable Is Issued on January

Multiple Choice

A five-year, 4%, $80,000 note payable is issued on January 1. Terms include fixed annual principal payments of $16,000, plus interest on the outstanding balance. The entry to record the first instalment payment will include a

A) debit to Notes Payable of $16,000.
B) credit to Interest Expense of $3,200.
C) credit to Notes Payable of $12,800.
D) debit to Cash of $16,000.