On November 1, Alan Company signed a 120-day, 9% note payable, with a face value of $16,200. What is the adjusting entry for the accrued interest at December 31 on the note? (Use 360 days a year.)

Multiple Choice

• Debit Interest Payable, $486; credit Interest Expense, $486.
• No adjusting entry is required.
• Debit Interest Expense, $324; credit Interest Payable, $324.
• Debit Interest Expense, $243; credit Interest Payable, $243.
• Debit interest payable, $162; credit interest expense, $162.