On December 31, 20A, Bennett recorded an adjusting entry to account for interest that had accrued on the note. What is the approximate amount of interest expense that would have accrued at December 31, 20A?
A) $76,200
B) $96,000
C) $25,402
D) $32,000

Question

Quizplus · Accepted Answer

The interest rate on the note is 10%, and the note has been outstanding for 8 months (May 1st to December 31st). Therefore, the interest expense would be calculated as follows:
$500,000 x 10% x (8/12) = $25,402. Therefore, the answer is choice C.

On December 31, 20A, Bennett Recorded an Adjusting Entry to Account