Nirvana Corporation issued a one-year, 9%, $400,000 note on April 30, 2022.Interest expense for the year ended December 31, 2022 is

Question

Quizplus · Accepted Answer

To calculate the interest expense, we need to use the formula:

Interest Expense = Principal x Rate x Time

Here, the Principal is $400,000, the Rate is 9%, and the Time is 8 months (from April 30 to December 31).

To convert 8 months into a fraction of a year, we divide it by 12:

Time = 8/12 = 2/3

Now we can calculate the interest expense:

Interest Expense = $400,000 x 9% x 2/3
= $24,000

Therefore, the answer is B) $24,000.

Nirvana Corporation Issued a One-Year, 9%, $400,000 Note on April