On September 1, Kennedy Company loaned $110,000, at 12% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end?

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Multiple Choice

Debit Interest Receivable, $13,200; credit Cash, $13,200

Debit Interest Expense, $13,200; credit Interest Payable, $13,200

Debit Interest Receivable, 4,400; credit Interest Revenue, $4,400.

Debit Interest Expense, $4,400; credit Interest Payable, $4,400

Debit Cash, $4,400; credit Interest Revenue, $4,400.