On August 1, a $40,800, 9%, 3-year installment note payable is issued by a company. The note requires equal payments of principal plus accrued interest of $16,118.23. The entry to record the first payment on July 31 would include:

Multiple Choice

• Debit to Notes Payable of $16,118.23

• Debit to Interest Expense of $3,672.00.

• Debit to Cash of $16,118.23.

• Credit to Notes Payable of $16,118.23

• Credit to Cash $12,446.23