Lorenz Company issues a longterm note payable for $100,000 and promises to pay back the principal and 6% semiannual interest (that means 6% annual interest compounded semi-annually) in 5 years on January 1, Year 6.

(Same information presented in question 3)

Is there an incremental impact on Net Income from any necessary adjustment made at 12/31/1 related to this note? Assume that the only time interest is paid as stated on 1/1/6.