On September 1, Kennedy Company loaned $100,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?
A. Debit Interest Receivable, $12,000; credit Cash, $12,000.
B. Debit Interest Expense, $4,000; credit Interest Payable, $4,000.
C. Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.
D. Debit Interest Expense, $12,000; credit Interest Payable, $12,000.
E. Debit Cash, $4,000; credit Interest Revenue, $4,000.
Answer: C
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