A five-year, 6%, $47,000 note payable is issued on January 1.Terms include fixed annual principal payments of $9,400, plus interest on the outstanding balance.The entry to record the first instalment payment will include a
A)debit to Notes Payable of $9,400.
B)credit to Interest Expense of $2,820.
C)credit to Notes Payable of $12,220.
D)debit to Cash of $9,400.

Question

Quizplus · Accepted Answer

The entry to record the first installment payment will include a debit to Notes Payable of $9,400 to reduce the principal balance.

A Five-Year, 6%, $47,000 Note Payable Is Issued on January