Prepare any necessary adjusting or correcting entries called for by the following situation. Assume that no entries have been made regarding the situation other than those specifically described.

On January 1, $10,500 of machinery was purchased. $500 cash was paid down and a 3-month, 12% note payable was signed for the balance. The January 1 transaction was properly recorded. Prepare the adjustment for the interest as of January 31.

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