Edmond Office Equipment Borrowed $70,000 at a 5% Annual Interest $\begin{array}{lrr} \text { Interest Expense} &1,750\\ \text {Interest Payable } &&1,750\\\end{array}$

Edmond Office Equipment borrowed $70,000 at a 5% annual interest rate on July 1. Principal and interest are due on December 31. The company's fiscal year ends on October 31. What adjusting entry should be made on that date? (Do not round intermediary calculations. Only round your final answer to the nearest dollar.)

A) No entry
B) $\begin{array}{lrr} \text { Interest Expense} &1,750\\ \text {Interest Payable } &&1,750\\\end{array}$

C) $\begin{array}{lrr} \text { Interest Expense} &1,167\\ \text {Interest Payable } &&1,,167\\\end{array}$

D) $\begin{array}{lrr} \text {Prepaid Interest } &1,167\\ \text {Interest Payable } &&1,167\\\end{array}$