Rainey Enterprises loaned $$40,000$ to Small Company on June $1,$ Year $1,$ for one year at $7$ percent interest.

Required

Record these general journal entries for Rainey Enterprises:

$(1)$ The loan to Small Company.

$(2)$ The adjusting entry at December $31,$ Year $1.$

$(3)$ The adjusting entry and collection of the note on June $1,$ Year $2.$

Show the effects of the three given transactions in a horizontal statements model.