A Corporation Borrowed $125,000 Cash by Signing a Five-Year, 9

A corporation borrowed $125,000 cash by signing a five-year, 9% installment note requiring annual payments each December 31 of accrued interest plus equal amounts of principal. What journal entry would the issuer record for the first payment?

A) $\begin{array}{|c|r|r|}\hline \text { Interest Expense } & 2,250 & \\\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 27,250 \\\hline\end{array}$
B) $\begin{array}{|l|r|r|}\hline \text { Notes Payable } & 27,250 & \\\hline \text { Interest Payable } & & 2,250 \\\hline \text { Cash } & & 25,000 \\\hline\end{array}$
C) $\begin{array}{|c|r|r|}\hline \text { Interest Expense } & 11,250 & \\\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 36,250 \\\hline\end{array}$
D) $\begin{array}{|c|r|r|}\hline \text { Notes Payable } & 25,000 & \\\hline \text { Cash } & & 25,000 \\\hline\end{array}$
E) $\begin{array}{|c|r|r|}\hline \text { Notes Payable } & 11,250 & \\\hline \text { Cash } & & 11,250 \\\hline\end{array}$