On July 1, 2014, Allen Company signed a $100,000, one-year, 6 percent note payable. The principal and interest will be paid on June 30, 2015. How much interest expense should be reported on the income statement for the year ended December 31, 2014?

Question

Quizplus · Accepted Answer

The interest expense for the year ended December 31, 2014 can be calculated as (100,000 x 6% x 6/12) = $3,000. This is because the note payable was only outstanding for six months in 2014. Therefore, option B is the correct choice.

On July 1, 2014, Allen Company Signed a $100,000, One-Year