Lemming makes an $18,750,120-day,8% cash loan to Notions Co.on November 1.Lemming's end-of-period adjusting entry on December 31 should be:

A) Debit Cash for $250; credit Notes Receivable $250.
B) Debit Interest Revenue $500; credit Notes Receivable $500.
C) Debit Interest Receivable $250; credit Interest Revenue $250.
D) Debit Interest Receivable $500; credit Interest Revenue $500.
E) Debit Notes Receivable $500; credit Interest Revenue $500.

The interest for the loan can be calculated using the formula: Principal * Rate * Time = Interest. Here, the principal is $18,750, the annual interest rate is 8%, and the time is 60 days (from November 1 to December 31, assuming a 360-day year for simplicity). The calculation is $18,750 * 8% * (60/360) = $250. This interest has been earned by December 31 but not yet received, so it should be recorded as Interest Receivable (an asset) and Interest Revenue (to recognize the earned income). Hence, the correct entry is to debit Interest Receivable and credit Interest Revenue for $250.