On October 1, 2020, Barakat Company borrows $20,000 from First Street Bank on a 15-year mortgage The annual interest rate is 10%. Assuming adjusting entries are only prepared at year-end, the company should make the following adjusting entry:

Click here to use calculator Select one: a. Debit Interest Receivable, $500; Credit Interest Revenue, $500. b. Debit Interest Payable, $500; Credit Interest Expense, $500. c. Debit Interest Expense, $2,000; Credit Interest Payable, $2,000. d. Debit Interest Expense, $500; Credit Interest Payable, $500.