I need help with an Intermediate Accounting Problem dealing with calculating Interest Expense

It's multiple choice, and by process of elimination I think I have it, but I am not sure how to substantiate it.

Morrison Corporation borrowed $45,000 from Commercial Bank on June 1 of the current year. The bank required 9% interest. Interest will be paid every three months until the 9-month note is paid. What is the total Interest Expense and the Interest Payable at December 31 of the current year?

A) Interest Expense $2,362.50; Interest Payable $2,362.50 B) Interest Expense $337.50; Interest Payable $337.50 C) Interest Expense $2,362.50; Interest Payable $337.50 D) Interest Expense $3,037.50; Interest Payable $2,362.50

D is the only one that makes sense to me, but it really doesn't add up in my head. I'm really just looking for a shove in the right direction so I can try to figure it out myself.

Posted Feb 16, 2017, 11:09 PM UTC

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