Avery Mart Borrows $630,000 on July 1 with a Short-Term

Avery Mart borrows $630,000 on July 1 with a short-term loan that has an annual interest rate of 5% which is payable on the first day of each subsequent quarter.
What will Avery Mart need to accrue on August 31, assuming that no accrual has yet been made?

A) $31,500; Decrease liabilities and decrease cash
B) $10,500; Decrease liabilities, decrease cash
C) $5,250; Increase liabilities, increase expenses
D) $10,500; Increase liabilities, decrease retained earnings