How do I enter this transaction in the journal?

A company paid $4,500 in interest: $500 incurred in January, 2005, and $4,000 to cover the amount owed as of 12/31/2004.

I think my answer is wrong. I have...

DR: Interest Expense $500
DR: Interest Payable $4000
... CR: Cash $4500

Thanks.

Actually, you're answer is correct. :-)

Any particular reason you're questioning it, or just typical second guessing yourself?