The General Fund borrowed $10,000 on a six-month note, with 5.0% interest, on April 1. As of the June 30 fiscal year end, the General Fund would report accrued interest payable in the amount of

Question

Quizplus · Accepted Answer

We can calculate the accrued interest payable using the simple interest formula:

Interest = (Principal x Rate x Time) / 12

Where: 
Principal = $10,000 
Rate = 5% 
Time = 3 months (April, May, June)

Interest = (10,000 x 0.05 x 3) / 12 = $125

Therefore, the General Fund would report accrued interest payable of $125 as of the June 30 fiscal year end.

The General Fund Borrowed $10,000 on a Six-Month Note, with 5.0