Question: A five-year, 4%, $80,000 note payable is issued on January 1. Terms include fixed annual principal payments of $16,000, plus interest on the outstanding balance.

A five-year, 4%, $80,000 note payable is issued on January 1. Terms include fixed annual principal payments of $16,000, plus interest on the outstanding balance. The entry to record the first instalment payment will include a

debit to Notes Payable of $16,000.

credit to Interest Expense of $3,200.

credit to Notes Payable of $12,800.

debit to Cash of $16,000.

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