Included in Allen Corp

Multiple Choice

Included in Allen Corp.'s balance sheet at June 30, 2013 is a 10%, $3,000,000 note payable. The note is dated October 1, 2013 and is payable in three equal annual payments of $1,500,000 plus interest. The first interest and principal payment was made on October 1, 2014. In Allen's June 30, 2015 balance sheet, what amount should be reported as accrued interest payable for this note?

A) $337,500.
B) $225,000.
C) $112,500.
D) $75,000.