On September 1,2010,Donna Equipment signed a one-year,8% interest-bearing note payable for $50,000.Assuming that Donna Equipment maintains its books on a calendar year basis,how much interest expense that should be reported in the 2011 income statement?
A)$2,667
B)$4,000
C)$1,333
D)$3,000

Question

Quizplus · Accepted Answer

2011 interest expense ($2,667) = Amount borrowed ($50,000) F1F1F1S1F1F1F10 Interest rate (8%) F1F1F1S1F1F1F10 Number of months borrowed relative to a year (8 F1F1F1S1F1F1F10 12)

On September 1,2010,Donna Equipment Signed a One-Year,8% Interest-Bearing Note Payable