On 1 November 2015, Archangel Services issued $200 000 of 10- year debentures with a stated rate of 3%. The debentures were sold at par, and make half- yearly payments on 30 April and 31 October. At 31 December 2015, Archangel made an adjusting entry to accrue interest at year- end. How much interest expense will be recorded at 31 December 2015?
A)$500
B)$1 000
C)$1 500
D)$6 000

Question

Quizplus · Accepted Answer

The interest expense for two months (November and December) is calculated as follows: $200,000 x 3% x (2/12) = $1,000.

On 1 November 2015, Archangel Services Issued $200 000 of 10-