Keck Company signed a three-month, 8% note on November 1, 2019 for the purchase of $60,000 of inventory. Assuming the company's accounting period ends on December 31, which one of the following statements is not correct?

Question

Quizplus · Accepted Answer

The interest for the three-month period is $1,200 ($60,000 x 8% x 3/12). By December 31, 2019, two months of interest ($800) should be recorded as Interest Expense and Interest Payable. On February 1, 2020, the remaining one month of interest ($400) should be recorded, not $800.

Keck Company Signed a Three-Month, 8% Note on November 1