On July 1,2019,Allen Company signed a $100,000,one-year,6 percent note payable.The principal and interest will be paid on June 30,2020.How much interest expense should be reported on the income statement for the year ended December 31,2019?

Question

Quizplus · Accepted Answer

The interest expense for the year ended December 31, 2019 will be calculated on the outstanding principal balance for six months (July to December).

Interest expense = Principal balance x Interest rate x Time

= $100,000 x 6% x 6/12

= $3,000

Therefore, the answer is B) $3,000.

On July 1,2019,Allen Company Signed a $100,000,one-Year,6 Percent Note Payable