The question is, Midshipmen Company borrows $10,500 from Falcon Company on July 1, 2018. Midshipmen repays the amount borrowed and pays interest of 12% (1%/month) on June 30, 2019.
How would I calculate the 2018 year-end adjusted balances of Interest Payable and Interest Expense (assuming the balance of Interest Payable at the beginning of the year is $0).