1. What is an adjusting journal entry?

2. The details of the loan contract:

On October 1, 2020 the company entered into one-year-10%-interest-rate loan agreement. The amount of the loan is $ 120,000 (hundred and twenty thousand). The principle and the interest are to be repaid at the end of the one year period. Question: A)The amount of the adjusting journal entry on December 31, 2020? B)Effect of this adjusting entry on the financial statements? (example: Assets will increase by $ 5,000 and liabilities decrease by $ 4,000 etc.