Refer to the information in BE8–1. Determine the financial statement effects of (1) the issuance of the note and (2) the adjusting entry for interest owed by December 31, the end of the reporting period.

Data from in BE8-1

On November 1, Bahama Cruise Lines borrows $4 million and issues a six-month, 6% note payable. Interest is payable at maturity. Record the issuance of the note and the appropriate adjusting entry for interest owed by December 31, the end of the reporting period.