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 3-year, 4% note.
Required:
If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 31?