Refer to the information for Kinsella Seed above. What journal entry should be recorded on December 31, 2011?
a. Debit Interest Expense 5,000; credit Interest Payable 5,000.
b. Debit Interest Receivable 20,000; credit Interest Expense 20,000.
c. Debit Interest Payable 5,000; credit Interest Expense 5,000.
d. No entry is necessary.
Kinsella Seed borrowed $200,000 on October 1, 2011, at 10 percent interest. The interest and principal are due on October 1, 2012.