Accrued Interest OBJECTIVE 2 On May 1, the Garnett Corporation wanted to purchase a \(\$ 200,000\) piece of equipment, but Garnett was only able to furnish \(\$ 75,000\) of its own cash to purchase the equipment. Garnett borrowed the remainder of the \(\$ 200,000\) from the People's National Bank on a three-year, \(4 \%\) note.

\section*{Required:}

If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 31?

Brief Exercise