Exercise 7-9A (Static) Financial statement effects of an installment note LO 7-5 Dan Dayle started a business by issuing an $80,000 face value note to First State Bank on January 1, Year 1. The note had an 8 percent annual rate of interest and a five-year term. Payments of $20,037 are to be made each December 31 for five years. Required a. What portion of the December 31 , Year 1, payment is applied to interest expense and principal? b. What is the principal balance on January 1 , Year 2 ? c. What portion of the December 31, Year 2, payment is applied to interest expense and principal? (Round your answers to the nearest dollar amount.)