On November 1, Year 1, Noble Company borrowed $96,000 from South Bank and signed a 7%, six-month note payable, all due at maturity. The interest on this loan is stated separately.

At December 31, Year 1, the adjusting entry with respect to this note includes a:

Multiple Choice

• Credit to Interest Payable for $1,120.

• Credit to Notes Payable for $1,120.

• Debit to Interest Expense for $2,240.

• Credit to Cash for $2,240.