On December 1, Watson Enterprises signed a $24,000, 60-day, 4% note payable as replacement of an account payable with Erikson Company. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Question

Quizplus · Accepted Answer

The formula to calculate interest expense on a note is: Principal x Rate x Time

Principal = $24,000
Rate = 4%
Time = (31 days / 360 days)

Plugging in the values yields:

Interest Expense = $24,000 x 4% x (31/360) = $80

On December 1, Watson Enterprises Signed a $24,000, 60-Day, 4