On July 1, 2014, Jo’s Flower Shop borrowed $25,000 from the bank. Jo signed a ten-month, 8% promissory note for the entire amount. Jo’s uses a calendar year-end.

Required
1. Prepare the journal entry on July 1 to record the issuance of the promissory note.
2. Prepare any adjusting entries needed at year-end.
3. Prepare the journal entry on May 1 to record the payment of principal and interest.