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Borrower Company borrowed $100,000 from Bank A on August 1 of Year 1. The annual interest rate on the loan is 12%. Borrower Company will

Borrower Company borrowed $100,000 from Bank A on August 1 of Year 1. The annual interest rate on the loan is 12%. Borrower Company will repay the entire loan, both principal and accrued interest, after one year on July 31 of Year 2. So, Borrower Company will pay NO CASH to Bank A between August 1 of Year 1 and July 31 of Year 2.

Which ONE of the following is included in the ADJUSTING ENTRY necessary to record interest expense on the books of Borrower Company on December 31 of Year 1?

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