Three months before year-end, Billings Company signed a $100,000, 12%, 6-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Question

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Interest should be accrued at year-end because the note has not yet matured and the company has incurred an obligation to pay interest.

Three Months Before Year-End, Billings Company Signed a $100,000, 12