Lemming Makes an $18,750, 120-Day, 8% Cash Loan to Notions

Multiple Choice

Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:

A) Debit Interest Receivable $500; credit Interest Revenue $500.
B) Debit Cash for $250; credit Notes Receivable $250.
C) Debit Interest Revenue $500; credit Notes Receivable $500.
D) Debit Interest Receivable $250; credit Interest Revenue $250.
E) Debit Notes Receivable $500; credit Interest Revenue $500.