On September 1, Kennedy Company loaned $115,000, 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 Expense, $13,800; credit Interest Payable, $13,800
B. Debit Cash, $4600; credit Interest Revenue, $4600.
C. Debit Interest Expense, $4600; credit Interest Payable, $4600
D. Debit Interest Receivable, $13,800; credit Cash, $13,800
E. Debit Interest Receivable, 4600; credit Interest Revenue, $4600.
Answer: E
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