Refer to the information in BE3–12.

(1) Record the lending for Falcon on July 1, 2021.

(2) Record the adjusting entry for Falcon on December 31, 2021.

(3) Calculate the 2021 year-end adjusted balances of Interest Receivable and Interest Revenue (assuming the balance of Interest Receivable at the beginning of the year is $0).

BE3-12

Midshipmen Company borrows $15,000 from Falcon Company on July 1, 2021.

Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2022. 

(1) Record the borrowing for Midshipmen on July 1, 2021.

(2) Record the adjusting entry for Midshipmen on December 31, 2021.

(3) Calculate the 2021 year-end adjusted balances of Interest Payable and Interest Expense (assuming the balance of Interest Payable at the beginning of the year is $0).