On December 1, Casio borrowed $52,000 at a 6% interest rate from One Mutual Bank. The note payable plus interest will not be paid until April 1 of the following year. Casios accounting period ends on December 31, and adjustments are only made at year-end. The adjusting entry needed on December 31 for Casio is:

Multiple Choice

Debit Interest Expense, $1,040; credit Interest Payable, $1,040.

Debit Interest Payable, $1,040; credit Interest Expense, $1,040.

Debit Interest Expense, $260; credit Interest Payable, $260.

Debit Interest Expense, $260; credit Note Payable, $260.

No entry required.