INTEREST PAYMENTS, INTEREST EXPENSE, AND ADJUSTMENTS. Payette Farms, Inc., borrows small amounts of cash from local banks to purchase fertilizer and other supplies at times when prices are lowest. On January 1, 19x3, Payette owed

$4,800 of interest on its outstanding loans. During 19x3, Payette paid interest in the amount of $16,230 (including the $4,800 owed on January 1, 19x3) and debited the entire amount to interest payable. On December 31, 19x8, Payette owed $6,220 of interest, none of which had been recorded.

REQUIRED:

1. What was the amount of 19x3 interest expense?

2. Prepare the journal entry to adjust the interest expense and interest payable accounts at December 31, 19x38.