Bread Basket provides baking supplies to restaurants and grocery stores. On November 1, 2014, Bread Basket signed a €500,000, 6-month note payable. The note requires Bread Basket to pay interest at an annual rate of 6%. Assuming Bread Basket makes the appropriate adjusting entry, what is the impact on its December 31, 2014 statement of financial position?

Question

Quizplus · Accepted Answer

The interest for two months (November and December) is €5,000, which is recorded as a liability (interest payable) on the statement of financial position.

Bread Basket Provides Baking Supplies to Restaurants and Grocery Stores