On January 1, 2011, Gemstone Company obtained a $280,000, 10-year, 11% installment note from Guarant

On January 1, 2011, Gemstone Company obtained a $280,000, 10-year, 11% installment note from Guarantee Bank. The note requires annual payments of $47,544, with the first payment occurring on the last day of the fiscal year. The first payment consists of interest of $30,800 and principal repayment of $16,744. The journal entry to record the issuance of the installment note for cash on January 1, 2011 would include:

a debit to Interest Expense of $30,800

a credit to Interest Payable of $195,440

a credit to Notes Payable of $280,000

a debit to Notes Payable of $475,440