On August 1, Year 1 Gomez Company borrowed $48,000 cash. The one-year note carried a 5% rate of interest. Which of the following shows how the December 31, Year 1 recognition of accrued interest will effect Gomez's ledger accounts?
A) Interest payable (2400), Retained earnings (2400). B) Cash (2400), Retained earnings (2400). C) Interest payable (1400), Retained earnings (1400). D) Interest payable + 1000, Retained earnings (1000).
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