The amount of interest payable (assuming an outstanding balance of $4,000,000 of bonds)that should be included on the balance sheet for the debt service fund of the City of Russell at June 30, 2015 is
A)$ -0-.
B)$168,000.
C)$210,000.
D)$420,000.

Question

Quizplus · Accepted Answer

To calculate the amount of interest payable, we need to use the formula: Outstanding balance of bonds * Interest rate * Time. The time in this case is for one year, from July 1, 2014 to June 30, 2015. We are not given the interest rate, so we cannot calculate the exact amount of interest. However, we know that the interest payable must be between $168,000 and $420,000, based on the range of the multiple-choice answers. We can make an educated guess that the interest rate is around 5%, which would result in interest payable of $200,000. Since $200,000 is closest to answer choice C, that is the best choice.

The Amount of Interest Payable (Assuming an Outstanding Balance of $4,000,000