On January 1, Year 1, Ian Company borrowed $324,000 cash from Perth Bank by issuing a 5-year, 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan equals $81,150.

1. What is the amount of principal repayment included in the payment made on December 31, Year 1?
   1. $25,920
   2. $81,150
   3. $74,658
   4. $55,230

2. Which of the following shows the effects on the elements of the financial statement of the cash payment on December 31, Year 1?
3. Option A
4. Option B
5. Option C
6. Option D

Assets = Liab. + - + Stk. Equity Revenue NA NA NA | NA NA Net - Expense = Inc. - + = - NA = NA = - = - Stmt. of Cash Flows -FA/-OA -FA -FA/-OA -OA -1 + + + ! +