17

On October 1, a company lends $10,000 to an employee who signs a 9%, 6-month promissory note. The company is preparing its year-end financial statements on December 31. No adjusting entries have been recorded in connection with this note. What adjusting entry should be recorded before the financial statements are prepared?

A) Debit Interest Revenue and credit Interest Receivable for $225

B) Debit Interest Receivable and credit Interest Revenue for $450

c) Debit Interest Revenue and credit Interest Receivable for $450

D) Debit Interest Receivable and credit Interest Revenue for $225