On 1 November 2016,Archangel Services issued $332,000 of 8-year debentures with a stated rate of 11% at par.The debentures make semiannual payments on 30 April and 31 October.At 31 December 2016,Archangel made an adjusting entry to accrue interest at year-end.How much Interest expense will be recorded at 31 December 2016? (Round to the nearest dollar. )
A)$6087
B)$36,520
C)$761
D)$18,260

Question

Quizplus · Accepted Answer

The interest expense for two months (November and December) is calculated as $332,000 * 11% * (2/12) = $6,087.

On 1 November 2016,Archangel Services Issued $332,000 of 8-Year Debentures