On July 1, Shady Creek Resort borrowed $270,000 cash by signing a 10-year, 9% installment note requiring equal payments each June 30 of $42,071. What is the journal entry to record the first annual payment?
A. Debit Interest Expense $24,300; debit Notes Payable $17,771; credit Cash $42,071.
B. Debit Interest Expense $24,300; debit Interest Payable $17,771; credit Cash $42,071.
C. Debit Interest Expense $42,071; credit Cash $42,071.
D. Debit Interest Expense $24,300; credit Cash $24,300.
E. Debit Cash $270,000; debit Interest Expense $42,071; credit Notes Payable $312,071.
Answer: A
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