On October 1, Steve's Carpet Service Borrows $€ 400,000$ From First National Bank on A

On October 1, Steve's Carpet Service borrows $€ 400,000$ from First National Bank on a $3 -$ month, $€ 400,000,8 \%$ note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is

A) $\begin{array} { l }\text {Notes Payable.}&408,000 \\ \text {Cash }&&408,000 \\\end{array}$

B) $\begin{array} { l }\text { Notes Payable.}&400,000 \\ \text { Interest Payable}&8,000 \\ \text {Cash }&&408,000 \\\end{array}$

C) $\begin{array} { l }\text { Notes Payable. }&400,000 \\ \text {Interest Payable }&32,000 \\ \text {Cash }&&432,000 \\\end{array}$

D) $\begin{array} { l }\text { Notes Payable. }&400,000 \\ \text { Interest Expense}&8,000 \\ \text { Cash}&&408,000 \\\end{array}$