On 1 October, Dalton Corp. borrows $100,000 from National Bank, signing a six-month note payable for that amount, plus interest to be computed at a rate of 9% per annum. Indicate all correct answers.
A) Dalton's liability at 1 October is only $100,000.
B) The maturity value of this note is $104,500.
C) At 31 December Dalton will have a liability for accrued interest payable in the amount of $4,500.
D) Dalton's total liability for this loan at 30 November is $101,500.

Question

Quizplus · Accepted Answer

D  A) On 1 October, Dalton's liability is only the principal amount of $100,000, as interest has not yet accrued.  D) By 30 November, two months of interest have accrued. The interest for two months is $100,000 * 9% * (2/12) = $1,500, making the total liability $101,500.