On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)
A. Debit Interest Expense, $720; credit Interest Payable, $720.
B. Debit Interest Expense, $120; credit Interest Payable, $120.
C. Debit Interest Payable, $120; credit Interest Expense, $120.
D. No adjusting entry is required.
E. Debit Interest Payable, $240; credit Interest Expense, $240.
Answer: B
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