A company needs to record 6 months of accrued interest on a 4-year, 12%, $12,000 promissory note payable. How much interest expense should be accrued?

Name: A company needs to record 6 months of accrued interest on a 4-year, 12%, $12,000 promissory note payable. How much interest expense should be accrued?
Brand: Quizplus
Rating: 4.8 (51 reviews)

Question

Quizplus · Accepted Answer

The interest expense for 6 months on a $12,000 note at 12% annual interest rate is calculated as follows: $12,000 * 12% = $1,440 annual interest; $1,440 / 2 = $720 for 6 months.

A Company Needs to Record 6 Months of Accrued Interest