On May 1, a retailer lent $30,000 to a customer who signed a 5%, 6-month promissory note. Principal and accrued interest are due on November 1. Adjusting entries are done annually. If the retailers year end is August 31, the year end adjusting entry to record interest would be:

Select one:

a.

debit Interest Expense, $375; credit Interest Payable, $375.

b.

debit Interest Receivable, $500; credit Interest Revenue, $500.

c.

debit Interest Expense, $1,500; credit Interest Payable, $1,500.

d.

debit Interest Expense, $750; credit Interest Payable, $750.

e.

debit Interest Receivable, $625; credit Interest revenue, $625.