Gander Inc.had a term loan outstanding throughout the year of $500,000 with an interest rate of 8%.They make interest payments quarterly, and the last one was November 30, 2013.The next payment on the loan, $50,000, is due December 31, 2013.What amount would be reported on Gander's income statement for the year ended December 31, 2013, related to the loan?

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Quizplus · Accepted Answer

The annual interest expense is $500,000 * 8% = $40,000. Since interest payments are made quarterly, the total interest expense for the year is $40,000.