On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What is the journal entry to record the first annual payment?
A. Debit Interest Expense $20,000; credit Cash $20,000.
B. Debit Interest Expense $37,258; credit Cash $37,258.
C. Debit Interest Expense $20,000; debit Notes Payable $17,258; credit Cash $37,258.
D. Debit Interest Expense $20,000; debit Interest Payable $17,258; credit Cash $37,258.
E. Debit Cash $250,000; debit Interest Expense $37,258; credit Notes Payable $287,258.
Answer: C
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