Brief Exercise $4-12($Algo$)$ Determine the adjustment for interest payable $($LO$4-3)$

Midshipmen Company borrows $$16,000$ from Falcon Company on July $1,2026.$ Midshipmen repays the amount borrowed and will pay

interest of $12\%(1\%$ per month$)$ on June $30,2027.$ The balance of Interest Payable at the beginning of the year is $$0.$

Determine the accounts to be adjusted by Midshipmen on December $31,$ the amount of the adjustment, and the ending balances.

Assume no adjustments were previously made during the year.