On January 1, 2015, Spencer Ltd. Borrowed $100,000 from a local financial institution. The note payable has an annual interest rate of 4%. Interest payments are made at the end of each quarter (that is, March 31^st, June 30^th, etc.). The notes principal of $100,000 is to be repaid on January 1, 2016. Choose the correct entry (if any) to be made on January 1, 2015.

a.

Debit: Cash (+A) $100,000

Credit: Interest Payable (+E, - SE) $4,000

Credit: Note Payable (+L) $96,000

b.

Debit: Cash (+A) $100,000

Credit: Note Payable (+L) $100,000

c.

Debit: Cash (+A) $96,000

Debit: Interest Expense (+E, - SE) $4,000

Credit: Note Payable (+L) $100,000

d.

No entry should be made at this time.

** Please explain why each answer is correct/incorrect