Slack Inc. borrowed $320,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31?

Question

Quizplus · Accepted Answer

To calculate the interest recognized for this period, we need to find out how many months the loan was outstanding. From April 1 to December 31, there are 9 months.

Next, we need to calculate the interest expense using the formula:

Interest expense = Principal x Interest rate x Time

In this case, the principal is $320,000, the interest rate is 12%, and the time is 9/12 (or 0.75, since there are 12 months in a year).

So, the interest expense is:

$320,000 x 12% x 0.75 = $28,800

Therefore, the answer is D) $28,800.

Slack Inc Borrowed $320,000 on April 1