On November 1, Alan Company Signed a 120-Day, 8% Note

Multiple Choice

On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31, the company's year end, on the note?

A) Debit interest expense, $0; credit interest payable, $0.
B) Debit interest payable, $120; credit interest expense, $120.
C) Debit interest expense, $120; credit interest payable, $120.
D) Debit interest expense, $720; credit interest payable, $720.
E) Debit interest payable, $240; credit interest expense, $240.