On September 1, Kennedy Company Loaned $100,000, at 12% Annual

Multiple Choice

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 Cash, $4,000; credit Interest Revenue, $4,000.
B) Debit Interest Expense, $4,000; credit Interest Payable, $4,000
C) Debit Interest Expense, $12,000; credit Interest Payable, $12,000
D) Debit Interest Receivable, $12,000; credit Cash, $12,000
E) Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.