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Brief Exercise 8-40 (Algorithmic) Accrued Interest On May 1, the Garnett Corporation wanted to purchase a $545,000 piece of equipment, but Garnett was only able to furnish $65.400 of its own cash to purchase the equipment. Garnett borrowed the remainder of the $545,000 from the People's National Bank on a 3-year, 8.5% note. Required: If the company keeps its records on a calendar year, what adjusting entry should Garnett make on December 317 Round amounts to the nearest dollar. Dec. 31 Interest Expense Interest Payable (Record accrued interest expense) Feedback Check My Work Expenses must be matched to the period it helped generate revenues. Interest - Principal Annual Interest Rate x Fraction of One Year