On January 1, Gemstone Company Obtained a $165,000, 10-Year, 7

Multiple Choice

On January 1, Gemstone Company obtained a $165,000, 10-year, 7% installment note from Guarantee Bank. The note requires annual payments of $23,492, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $11,550 and principal repayment of $11,942. The journal entry to record the payment of the first annual amount due on the note would include a

A) debit to cash for $11,942
B) credit to interest payable for $11,550
C) debit to notes payable for $11,942
D) debit to interest expense for $23,492