Chico Company borrowed $40,000 on a four-year, 8% installment note. How will Chico record the issuance of this note?
A.
| Cash | 40,000 | |
| Notes payable | 40,000 |
B.
| Cash | 40,000 | |
| Interest payable | 3,200 | |
| Notes payable | 36,800 |
C.
| Cash | 43,200 | |
| Notes payable | 43,200 |
D.
| Cash | 36,800 | |
| Discount on notes payable | 3,200 | |
| Notes payable | 40,000 |
Answer: A
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