A $900,000 note payable requires 10% annual interest with interest due monthly on the 15^th of each month.An interest payment of $7,500 was made on April 15 and the next payment is due on May 15.As of April 30,$3,750 of interest expense has accrued.How would the company record the related adjusting entry? A)Debit Interest Expense for $3,750 and credit Cash for $3,750. B)Debit Interest Expense for $3,750 and credit Interest Payable for $3,750. C)Debit Interest Payable for $3,750 and credit Cash for $3,750. D)Debit Interest Payable for $3,750 and credit Interest Expense for $3,750. E)Debit Interest Expense for $3,750,credit Interest Payable for $3,750 and credit cash for $7,500.

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The adjusting entry would be to debit Interest Expense for the amount of interest accrued ($3,750) and credit Interest Payable for the same amount, since the company has incurred but not yet paid the interest expense. Option A is incorrect because there is no cash payment being made in this adjusting entry. Option C is incorrect because there is no cash receipt being recorded. Option D is incorrect because it incorrectly debits Interest Expense instead of Interest Payable. Option E is incorrect because it includes a credit to cash, which is not applicable in this adjusting entry.

A $900,000 Note Payable Requires 10% Annual Interest with Interest