The entry to record an installment payment on a long-term note payable is
A) Mortgage Notes Payable Cash
B) Interest Expense Cash
C) Mortgage Notes Payable Interest Expense
Cash
D) Bonds Payable Cash

Question

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When a business makes an installment payment on a long-term note payable, it needs to record the decrease in the note payable balance as well as the interest expense associated with the payment. Therefore, the best entry is to debit the Mortgage Notes Payable account for the amount of the payment, credit the Cash account for the same amount, and debit the Interest Expense account for the interest portion of the payment (which is calculated based on the note's interest rate and the outstanding balance).

The Entry to Record an Installment Payment on a Long-Term