Question: On August 1, a $54,000, 8%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest

On August 1, a $54,000, 8%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $20,953.81. The entry to record the first payment on July 31 would include:

a Debit to Notes Payable of $20,953.81
b Debit to Interest Expense of $4,320.00.
c Debit to Cash of $20,953.81.
d Credit to Notes Payable of $20,953.81
e Credit to Cash $16,633.81

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