On December 1, 2021, Old World Deli signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2022. Old World Deli should record which of the following adjusting entries at December 31, 2021?
A) Debit Interest Expense and credit Interest Payable, $7,500.
B) Debit Interest Expense and credit Cash, $7,500.
C) Debit Interest Expense and credit Interest Payable, $1,250.
D) Debit Interest Expense and credit Cash, $1,250.
Answer: C
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