Ye Olde Christmas Shop Signs a Three-Month Note Payable to Help

Ye Olde Christmas shop signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on October 1 in the amount of $20,000 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? $\begin{array}{lrr}\text { a. Interest Expense } & 100 \\\quad\quad\text { Interest Payable } && 100& \\\text { b. Interest Expense } &200 & \\\quad\quad\text { Interest Payable } & & 200 \\\text { c. Interest Expense } & 300 \\\quad\quad\text { Interest Payable } &&300 \\\text { d. Interest Expense } & 1,200 \\\quad\quad\text { Note Payable } & & 1,200 \end{array}$