Allen Corp.'s liability account balances at June 30, 2007 included a 10% note payable in the amount of $2,400,000.The note is dated October 1, 2005 and is payable in three equal annual payments of $800,000 plus interest.The first interest and principal payment was made on October 1, 2006.In Allen's June 30, 2007 balance sheet, what amount should be reported as accrued interest payable for this note?
A)$180,000.
B)$120,000.
C)$60,000.
D)$40,000.

Question

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The Answer of Allen Corp.'s liability account balances at June 30, 2007 included a 10% note payable in the amount of $2,400,000.The note is dated October 1, 2005 and is payable in three equal annual payments of $800,000 plus interest.The first interest and principal payment was made on October 1, 2006.In Allen's June 30, 2007 balance sheet, what amount should be reported as accrued interest payable for this note?
A)$180,000.
B)$120,000.
C)$60,000.
D)$40,000.