On May 1, 2021, Townsley borrowed $250,000 from Prime Bank by signing a three-year, 6% note payable. Interest is due each May 1. What adjusting entry, if any, should Townsley record on December 31, 2021?
A) Debit Interest Expense and credit Interest Payable for $5,000.
B) Debit Interest Expense and credit Interest Payable for $10,000.
C) Debit Interest Expense and credit Interest Payable for $15,000.
D) No adjusting entry is necessary.
Answer: B
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Accounting
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