On November 1,2015,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2016.The Bagel Factory should report interest payable at December 31,2015,in the amount of:
A)$0.
B)$1,000.
C)$2,000.
D)$3,000.

Question

Quizplus · Accepted Answer

The note payable was signed on November 1,2015 and the interest on the note is 6%. Therefore, the interest accrued for two months (November and December) is:
($100,000 x 6% x 2/12) = $1,000
This means that as of December 31, 2015, The Bagel Factory has an accrued interest payable of $1,000. Therefore, the correct choice is B.

On November 1,2015,The Bagel Factory Signed a $100,000,6%,six-Month Note Payable