Flower Mart Borrows $240,000 on July 1 with a Short-Term

Multiple Choice

Flower Mart borrows $240,000 on July 1 with a short-term loan that has an annual interest rate of 5% which is payable on the first day of each subsequent quarter.
What will Flower Mart need to accrue on August 31, assuming that no accrual had been made since the last interest payment?

A) $6,000; Decrease liabilities and decrease cash
B) $2,000; Increase liabilities, increase expenses
C) $1,500; Decrease liabilities, decrease cash
D) $1,000; Increase expenses