A Gift Shop, Located in a Hotel, Signs a Three-Month $\quad$

A gift shop, located in a hotel, signs a three-month note payable to help finance increases in inventory for the Christmas shopping season.The note is signed on November 1 in the amount of $60,000 with annual interest of 12%.What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest?

A) Interest Expense.................... $\quad$ 1,200
$\quad$ Interest Payable......................... $\quad$ $\quad$ $\quad$ 1,200
B) Interest Expense................... $\quad$ 1,800
$\quad$ Interest Payable........................ $\quad$ $\quad$ $\quad$ 1,800
C) Interest Expense................... $\quad$ 1,200
$\quad$ Cash.................................... $\quad$ $\quad$ $\quad$ $\quad$ 1,200
D) Interest Expense................... $\quad$ 1,200
$\quad$ Note Payable......................... $\quad$ $\quad$ $\quad$ $\quad$ 1,200