On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the adjusting entry for the accrued interest at December 31 on the note?

Debit interest expense, $0; credit interest payable, $0.

Debit interest payable, $120; credit interest expense, $120.

Debit interest expense, $120; credit interest payable, $120.

Debit interest expense, $720; credit interest payable, $720.

Debit interest payable, $240; credit interest expense, $240.