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 December 31,2013 before statements are prepared?

A) Avery must accrue $200 of interest expense.
B) Avery must accrue for the coming $2,000 principal payment.
C) Avery must pay out $200 of interest expense to the note holder.
D) Avery does not need to take any actions.