On February 1, Sheridan Ltd. signed a 4%, twelve-month bank loan payable for $192000 to help finance increases in inventory for the spring and summer season. Assuming no entries have been made previously for the interest on this loan, what is the required adjusting entry for the interest accrued to December 31?

a)

Interest Expense	7680
Interest Payable		7680

b)

Interest Expense	6400
Interest Payable		6400

c)

Interest Expense	640
Cash		640

d)

Interest Expense	7040
Interest Payable		7040