1. On October 1, a $30,000, 6%, 3-year installment note payable is issued by a company. The note requires that $10,000 of principal plus accrued interest be paid at the end of each year on September 30. The issuers journal entry to record the second annual interest payment would include:

1. A debit to Interest Expense for $1,800
2. A debit to Interest Expense for $1,200
3. A credit to Cash for $11,800
4. A credit to Cash for $10,000
5. A debit to Notes Payable for $1,200

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