On July 1, Shady Creek Resort borrowed $410,000 cash by signing a 10-year, 10% installment note requiring equal payments each June 30 of $66,726. What is the journal entry to record the first annual payment?

Multiple Choice

• Debit Cash $410,000; debit Interest Expense $66,726; credit Notes Payable $476,726.

• Debit Interest Expense $66,726; credit Cash $66,726.

• Debit Interest Expense $41,000; credit Cash $41,000.

• Debit Interest Expense $41,000; debit Interest Payable $25,726; credit Cash $66,726.

• Debit Interest Expense $41,000; debit Notes Payable $25,726; credit Cash $66,726.