Midshipmen Company borrows $15,500 from Falcon Company on July 1, 2018. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2019.

Record the lending for Falcon on July 1, 2018.

Record the adjusting entry for Falcon on December 31, 2018.

Calculate the 2018 year-end adjusted balances of Interest Receivable and Interest Revenue (assuming the balance of Interest Receivable at the beginning of the year is $0).