Holiday Gifts Signs a Three-Month Note Payable to Help Finance $\begin{array}{lrr}\text { Interest Expense }& 800 \\\text { Interest Payable } &&800 \\\end{array}$

Holiday Gifts 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 $80000 with annual interest of 6%. 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. $\begin{array}{lrr}\text { Interest Expense }& 800 \\\text { Interest Payable } &&800 \\\end{array}$

b. $\begin{array}{lrr}\text { Interest Expense. } & 1,200 \\ \text { Interest Payable} &&1,200 \\\end{array}$

c. $\begin{array}{lrr} \text { Interest Expense } & 800 \\ \text { Cash } &&800 \\\end{array}$

d. $\begin{array}{lrr} \text { Interest Expense } &800\\ \text { Notes Payable} &&800\\\end{array}$