Adjusting Entries for Interest At December 31 of Year 1, Portland Corporation had two notes payable outstanding (notes 1 and 2). At December 31 of Year 2, Portland also had two notes payable outstanding (notes 3 and 4). These notes are described below. December 31, Year 1 Note 1 Note 2 December 31, Year 2 Note 3 Note 4 Date of note November 25, Year 1 December 16, Year 1 December 11, Year 2 December 07, Year 2 Principal Amount Interest Rate Number of Days $27,000 16,800 15,400 18,000 8% 9% 9% 10% 90 60 120 90 Required a. Prepare the adjusting entries for interest at December 31 of Year 1. b. Assume that the adjusting entries were made at December 31 of Year 1, and that no adjusting entries were made during Year 2. Prepare the Year 2 journal entries to record payment of the notes that were outstanding at December 31 of Year 1. c. Prepare the adjusting entries for interest at December 31 of Year 2. Round answers to nearest dollar. Use 360 days for interest calculations when applicable.

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