Final answer:
The correct entry to record an installment payment on a long-term note payable is option C) Mortgage Payable, Interest Expense, Cash.
Step-by-step explanation:
The accurate journal entry to record an installment payment on a long-term note payable is option C) Mortgage Payable, Interest Expense, Cash. This entry reflects the financial transactions associated with reducing the balance of a long-term note payable, specifically denoted as Mortgage Payable. When making an installment payment, a portion of the payment goes towards reducing the outstanding principal (Mortgage Payable), and another portion covers the interest expense incurred over the payment period.
The Mortgage Payable account is debited to signify the reduction in the long-term debt, reflecting the repayment of the principal amount. Simultaneously, the Interest Expense account is debited to recognize the cost of borrowing and to align with the matching principle in accounting, which links expenses to the periods in which they are incurred.
On the credit side, the Cash account is credited to denote the actual outflow of cash from the company. This reduction in cash represents the financial impact of making the installment payment. Therefore, the journal entry captures the complex dynamics involved in such transactions, accurately reflecting the reduction in long-term debt, recognition of interest expense, and the decrease in cash reserves resulting from the payment.