On January 1, 2010, Teresa Loaned $12, 000 to Another $\begin{array} { c c c } \text { Interest Receivable } & 480 \\\text { Retained Earnings } & & 480\end{array}$

Multiple Choice

On January 1, 2010, Teresa loaned $12, 000 to another company on a three-year, 4% note.No interest was accrued in 2010.Cash will not be received for the interest until the end of the three-year period.The error was discovered before adjusting and closing entries were posted on December 31, 2011.Ignoring income taxes, the correct entry on December 31, 2011, should be

A) $\begin{array} { c c c } \text { Interest Receivable } & 480 \\\text { Retained Earnings } & & 480\end{array}$

B) $\begin{array} { c r } \text { Interest Receivable } & 960 \\\text { Interest Revenue } & 960\end{array}$
C) Interest Receivable $\quad 480$
Interest Revenue $\quad\quad\quad\quad 480$
D) $\begin{array} { c c } \text { Interest Receivable } & 960 \\\text { Interest Revenue } & 480 \\\text { Retained Earnings } & 480\end{array}$