Allen Inc. took out a one-year, 8%, $100,000 loan on March 31, 2021. Interest is due upon maturity of the loan. What adjusting entry, if any, should Allen Inc. record on December 31, 2021?
A) Debit Interest Expense and credit Interest Payable for $6,000.
B) Debit Interest Expense and credit Interest Payable for $2,000.
C) No adjusting entry is necessary.
D) Debit Interest Expense and credit Interest Payable for $8,000.
Answer: A
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