Amy Borrowed $25,000 for Her Business from a Local Bank

Multiple Choice

Amy borrowed $25,000 for her business from a local bank two years ago.To increase her deductions for 2017,she pays December interest of $400 and prepays January and February interest totaling $800 on December 30,2017.The maturity date of the note is November 30,2018.How much of the interest that she paid in December is deductible in 2017?
I.If she is a cash-basis taxpayer,Amy's interest deduction is $1,200.
II.If she is an accrual-basis taxpayer,Amy's interest deduction is $400.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.