What is the amount of interest expense Central Food's recognizes on this note in 2015?
A) $7,000.
B) $84,000.
C) $77,000.
D) $14,000.

Question

Quizplus · Accepted Answer

The amount of interest expense can be calculated by multiplying the outstanding balance of the note ($1,000,000) by the interest rate (7.7%) and by the time the note is outstanding during the year (8 months/12 months). This calculation results in an interest expense of $77,000.

What Is the Amount of Interest Expense Central Food's Recognizes