How do you calculate prepaid interest and notes payable from borrowed money from Second National Bank by issuing a four-month, 9 percent note for $48,000; received $46,560 because the bank deducted the interest in advance?
a) Prepaid interest = $48,000 * 9% * (4/12), Notes payable = $48,000 - Prepaid interest
b) Prepaid interest = $46,560 * 9% * (4/12), Notes payable = $48,000 - Prepaid interest
c) Prepaid interest = $48,000 - $46,560, Notes payable = $46,560
d) Prepaid interest = $46,560 * (4/12), Notes payable = $48,000 - Prepaid interest