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On Jan. 1, 2009, Banana Inc. received a 3-year, 5%-interest P3,000,000 note for a loan provided to its officer. Interest is collectible annual every Jan.

On Jan. 1, 2009, Banana Inc. received a 3-year, 5%-interest P3,000,000 note for a loan provided to its officer. Interest is collectible annual every Jan. 1, starting 2010 while the principal is due on the maturity date. The prevailing interest rate for similar notes is 7%. What is the adjusting journal entry on Dec. 31, 2009?*

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