Boudin Corporation, a Calendar-Year Company, Obtained a $15,000, One-Year, 10

Multiple Choice

Boudin Corporation, a calendar-year company, obtained a $15,000, one-year, 10 percent bank loan on October 31 of the current year. Interest is payable at the end of the loan term. The adjusting entry needed on December 31 is

A) A debit to Interest Expense of $1,500 and a credit to Interest Payable of $1,500
B) A debit to Interest Payable of $1,500 and a credit to Interest Expense of 1,500
C) A debit to Interest Expense of $250 and a credit to Interest Payable of $250
D) A debit to Interest Expense of $250 and a credit to Cash of $250