On October 1, 2010, Pennington Company issued a $40,000, 10%, nine-month interest-bearing note. Assuming interest was accrued in June 30, 2011, the entry to record the payment of the note on July 1, 2011, will include a:

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The note was issued for $40,000 with a 10% interest rate for nine months. The interest for nine months is $3,000 ($40,000 * 10% * 9/12). Since interest was accrued on June 30, 2011, the entry to record the payment on July 1, 2011, would include a debit to Interest Payable for $3,000 to clear the accrued interest.

On October 1, 2010, Pennington Company Issued a $40,000, 10