Barrow Tech issues a $650,000, 7%, 10-year mortgage note on January 1, 2020. Terms provide for annual installments of $83,017 due on January 1 each year. Wendell reports $45,500 as a current liability and $604,500 as a long-term liability on its December 31, 2020 balance sheet. Is this correct? If not, what impact does it have on the balance sheet?

A. It is incorrect because the principal reduction amount should be recorded as a current liability. As a result, the current liability is too high and the long-term liability is too low.

B. It is incorrect because the cash payment amount should be recorded as a current liability. As a result, the current liability is too low and the long-term liability is too high.

C. It is incorrect because 7% of the value of the issue amount should be recorded in addition to the interest expense. As a result, the current liability is too low and the long-term liability is too high.

D. It is correct because the interest expense represents the current liability on the loan.