On January 1, 2014, Tessa Loaned $12,000 to Another Company $\quad$

Multiple Choice

On January 1, 2014, Tessa loaned $12,000 to another company on a three-year, 4% note. No interest was accrued in 2014. Cash will not be received for the interest until the end of the three-year period. The error was discovered before adjusting and closing entries were posted on December 31, 2015. Ignoring income taxes, the correct entry on December 31, 2015, should be

A) Interest Receivable $\quad$$\quad$ 480
Retained Earnings $\quad$$\quad$$\quad$$\quad$ 480

B) Interest Receivable $\quad$$\quad$ 960
Interest Revenue $\quad$$\quad$$\quad$$\quad$$\quad$ 960

C) Interest Receivable $\quad$$\quad$$\quad$ 480
Interest Revenue $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ 480

D) Interest Receivable $\quad$$\quad$$\quad$ 960
Interest Revenue $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ 480
Retained Earnings $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ 480