Discount Mart borrows $400,000 on November 1, 2020 with a 6-month loan that has an annual interest rate of 6% payable when the loan is due. What amounts related to this loan will Discount Mart report on its financial statements for the year ended December 31, 2020?

Select one:

a. Income statement: $4,000 interest expense; Balance sheet: $400,000 loan payable and $4,000 interest payable; Cash flow statement: $400,000 inflow

b. Income statement: 0; Balance sheet: $400,000 loan payable $4,000; Cash flow statement: $400,000 net inflow

c. Income statement: $4,000 interest expense; Balance sheet: $400,000 loan payable and $4,000 interest payable; Cash flow statement: $396,000 inflow

d. Income statement: $4,000 interest expense; Balance sheet: $400,000 loan payable; Cash flow statement: $396,000 inflow