On September 1, 2014, Lowe Co. issued a note payable to National Bank in the amount of $900,000, bearing interest at 9%, and payable in three equal annual principal payments of $300,000. On this date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2015. At December 31, 2015, Lowe should record accrued interest payable of

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The accrued interest payable at December 31, 2015, would be calculated on the remaining principal after the first payment. Since the first payment of $300,000 was made on September 1, 2015, the remaining principal for the rest of the year would be $600,000. The interest for 4 months (September to December) at 9% annual interest rate on $600,000 is calculated as follows: $600,000 * 9% * (4/12) = $18,000.