On June 1, 2019, Mighty Fast Flooring issued a 10-month, 9 percent note for $5,000. The note was recorded in the Notes Payable-Trade account. The adjusting entry on December 31 to record the interest accrued (owed) on the note is:
A. a debit to Interest Expense for $450.00 and a credit to Interest Payable for $450.00.
B. a debit to Interest Expense for $262.50 and a credit to Notes Payable-Trade for $262.50.
C. a debit to Interest Income for $450.00 and a credit to Interest Receivable for $450.00.
D. a debit to Interest Expense for $262.50 and a credit to Interest Payable for $262.50.
Answer: D
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