On October 1, Swifty's Painting Service borrows $101000 from National Bank on a 3-month, $101000, 4% note. The entry by Swifty's Painting Service to record payment of the note and accrued interest on January 1 is

Dr notes payable $101,000

Dr interest payable $1010

Cr cash                                   $102,010

Explanation:

The accrued interest to be recognized on  31 December after 3 months have passed since the borrowing took place is computed thus:

3-month accrued interest=principal borrowed*interest rate*3/12

principal borrowed=$101000

interest rate=4%

3-month accrued interest=$101,000*4%*3/12

3-month accrued interest=$1,010

Initially, when the borrowing was taken, the note payable account would have been credited with $101,000 while cash was debited since cash as an asset  has increased.

On December 31, we would record interest of $1,010 as expense while interest payable is credited

Amount paid at maturity=principal+interest

Amount paid at maturity=$101,000+$1010

Amount paid at maturity=$102,010

the correct answer is b.)