On January 1, 2016, Denver Company borrowed $25,000 by issuing a 5-year note to Capital Bank. The note had a 10% annual rate of interest. The loan agreement called for five equal payments of $6,595 on December 31 of each year 2016 through 2020. What is the correct journal entry to record the loan payment on December 31, 2016?

a.

	Debit	Credit
Interest Expense	6,595
Cash		6,595

b.

	Debit	Credit
Installment Note Payable	6,595
Cash		6,595

c.

	Debit	Credit
Interest Expense	2,500
Installment Note Payable	4,095
Cash		6,595

d.

	Debit	Credit
Interest Expense	2,500
Cash	4,095
Installment Note Payable		6,595