A company has a \$250,000, 4% 10-year note payable with interest payable annually. What is the interest expense to be recorded at year-end?

• A. Debit Interest Expense \$20,000; Credit Interest Payable \$20,000.
• B. Debit Interest Payable \$10,000; Credit Interest Expense \$10,000.
• C. Debit Interest Payable \$20,000; Credit Interest Expense \$20,000.
• D. Debit Interest Expense \$10,000; Credit Interest Payable \$10,000.

Answer: (D)