Charleston Co. purchased 60, 6% APS Company bonds on January 1, 2017 for $60,000 cash. Interest is payable annually on January 1. The entry to record the December 31 interest accrual would include a

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Since the interest is payable annually on January 1, the company has earned interest for the entire year (12 months) ending on December 31. Therefore, at the end of the year, the company needs to accrue the interest that has been earned but not yet received. To record the accrual, the company will debit Interest Receivable (an asset account) to show that it has earned the interest but has not yet received it, and credit Interest Revenue (a revenue account) to recognize the income earned. Option A correctly identifies the debit to Interest Receivable for $3,600. Option B is incorrect because it incorrectly identifies the debit as Interest Revenue. Option C is incorrect because it incorrectly identifies the credit as Cash Revenue. Option D is incorrect because it suggests a debit to Debt Investments, which is not affected by the interest accrual.