Refer to PE 4-8.

(1) Make the adjusting entry necessary on the company's books with respect to this loan on December 31.

(2) Make the journal entry necessary on the company's books on the following April 30 to record payment of interest for the first year of the loan. Note: When making this April 30 entry, don't forget the adjusting entry that was made on December 31.

PE 4-8

On May 1, the company borrowed $75,000 from Bank of Salt Lake. The loan is for five years and bears an annual interest rate of 9%. Interest on the loan is to be paid in cash each year on April 30; the $75,000 loan amount is to be repaid in full after five years. Make the journal entry necessary on the company's books to record the receipt of this loan on May 1.