Company A purchased a large piece of equipment from Company B on January 1, 2022. Company A signed a note, agreeing to pay Company B $450,000 for the equipment on December 31, 2026. The market rate of interest for similar notes was 9%. The present value of $450,000 discounted at 9% for five years was $292,469. On January 1, 2022, Straight Industries recorded the purchase with a debit to equipment for $292,469 and a credit to notes payable for $292,469.

On December 31, 2022, Company A recorded an adjusting entry to account for interest that had accrued on the note. Assuming no adjusting entries have been made during the year, the interest expense accrued at December 31, 2022 is closest to:

A $38,193.

B $40,500.

C $26,322.

D $35,993.