On July 1,2013,Avery Services Issued a 4% Long-Term Note Payable

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year.Each yearly installment will include both principal repayment of $2,000 and interest payment for the preceding one-year period.
-What happens on July 1,2014?

A) Avery pays out $400 of interest only.
B) Avery pays out $400 of interest plus $2,000 of principal.
C) Avery pays out $2,000 of principal only.
D) Avery pays out the $200 of interest that was accrued at year-end.