On November 1, 2018, Sky Mountain Co. borrowed $200,000 cash on a 1-year, 6% note payable that requires Sky Mountain to pay both principal and interest on October 31, 2019. Given no prior adjusting entries have been recorded, the adjusting journal entry on December 31, 2018, Sky Mountain's year-end, would include a:

Multiple Choice

credit to Cash of $2,000.

debit to Interest Expense of $12,000.

credit to Interest Payable of $2,000.

credit to Note Payable of $2,000.