On September 1, Kennedy Company loaned $128,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?
a. Debit Interest Receivable, $15,360; credit Cash, $15,360
b. Debit Interest Expense, $15,360; credit Interest Payable, $15,360
c. Debit Interest Receivable, 5,120; credit Interest Revenue, $5,120.
d. Debit Interest Expense, $5,120; credit Interest Payable, $5,120
e. Debit Cash, $5,120; credit Interest Revenue, $5,120.
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