On August 1, Year 1 Gomez Company borrowed $48,000 cash. The one-year note carried a 5% rate of interest. Which of the following shows the journal entry necessary on December 31 to recognize accrued interest?

1.

account Titles	Debit	credit
interest payable	1,400
interest expense		1,400

2.

account titles	debit	credit
interest expense	1,000
interest payable		1,000

3.

account titles	debit	credit
interest payable	1,000
interest expense		1,000

4.

account titles	debit	credit
interest expense	1,400
interest payable		1,400