[10] For the current year, Frances Quinn had a time savings account with the Benevolent Savings Bank. The following entries appeared in her statement for the year:

March 30, interest credited $150 June 29, interest credited 160 July 25, penalty forfeiture because

of a premature withdrawal 125 September 28, interest credited 80 December 28, interest credited 85

The above information should be reported by Ms. Quinn on her current-year tax return as

A. Interest income of $350.

B. Interest income of $475.

C. Interest income of $475 and an itemized deduction for interest expense of $125.

D. Interest income of $475 and a deduction of $125 in arriving at adjusted gross income.