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What is the adjusting entry for accruing interest

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Question - On September 1, Kennedy Company loaned $100,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?

a. Debit Interest Expense, $12,000; credit Interest Payable, $12,000.

b. Debit Interest Expense, $4,000; credit Interest Payable, $4,000.

c. Debit Interest Receivable, $12,000; credit Cash, $12,000.

d. Debit Interest Receivable, $4,000; credit Interest Revenue, $4,000.

e. Debit Cash, $4,000; credit Interest Revenue, $4,000.

Reference no: EM132610278

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