On August 1, Luang Corporation signed a $30,000, 14%, 2-year note to help finance renovations being made to the corporation headquarters.
Assuming the interest is accrued only when the year ends on December 31, the appropriate journal entry for the first year would be:

a) Interest Expense $4,200; Interest Payable $4,200.
b) Interest Expense $4,200; Notes Payable $4,200.
c) Interest Expense $1,750; Interest Payable $1,750.
d) Interest Expense $1,750; Notes Payable $1,750.