Adjusting Entries for Interest At December 31 of Year 1, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31 of Year 2, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below.

	Date of note	Principal Amount	Interest Rate	Number of Days
December 31, Year 1
Note 1	11/25/Year 1	$35,000	8%	90
Note 2	12/16/Year 1	16,800	9	60
December 31, Year 2
Note 3	12/11/Year 2	15,400	9	120
Note 4	12/7/Year 2	18,000	12	90

Required a. Prepare the adjusting entries for interest at December 31 of Year 1. b. Assume that the adjusting entries were made at December 31 of Year 1, and that no adjusting entries were made during Year 2. Prepare the Year 2 journal entries to record payment of the notes that were outstanding at December 31 of Year 1. c. Prepare the adjusting entries for interest at December 31 of Year 2. Round answers to nearest dollar. Use 360 days for interest calculations when applicable.

General Journal
Date	Description	Debit	Credit
a.
Dec.31	Notes PayableInterest PayableInterest ExpenseCash
	Notes PayableInterest PayableInterest ExpenseCash
	To record interest on note 1.
Dec.31	Notes PayableInterest PayableInterest ExpenseCash
	Notes PayableInterest PayableInterest ExpenseCash
	To accrue interest on note 2.
b.
Feb.14	Notes Payable
	Notes PayableInterest PayableInterest ExpenseCash
	Interest Expense
	Notes PayableInterest PayableInterest ExpenseCash
	To record payment of Note 2.
Feb.23	Notes Payable
	Notes PayableInterest PayableInterest ExpenseCash
	Interest Expense
	Notes PayableInterest PayableInterest ExpenseCash
	To record payment of Note 1.
c.
Dec.31	Notes PayableInterest PayableInterest ExpenseCash
	Notes PayableInterest PayableInterest ExpenseCash
	To record interest on Note 3.
Dec.31	Notes PayableInterest PayableInterest ExpenseCash
	Notes PayableInterest PayableInterest ExpenseCash
	To record interest on Note 4.