On October 1, 2010, Pennington Company Issued a $40,000, 10

On October 1, 2010, Pennington Company issued a $40,000, 10%, nine-month interest-bearing note. If the Pennington Company is preparing financial statements at December 31, 2010, the adjusting entry for accrued interest will include a:

A) credit to Notes Payable of $1,000.
B) debit to Interest Expense of $1,000
C) credit to Interest Payable of $2,000.
D) debit to Interest Expense of $1,500.

Correct Answer:

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