Response to the following problem:
Favor Hospital invested $60,000 in 8 percent government bonds on August 1, 20X1. These bonds, which were purchased at face value, pay interest annually on August 1, commencing August 1, 20X2.
Required: Assuming that adjustments are made annually on December 31 only, prepare the necessary adjusting entry for accrued interest as of December 31, 20X1.