On December 1, Martin Company signed a 90-day, 6% note payable, with a face value of $5,000. What amount of interest expense is accrued at December 31 on the note?
A) $0
B) $25
C) $50
D) $75
E) $300

Question

Quizplus · Accepted Answer

The interest expense for one month (30 days) on a $5,000 note at 6% annual interest is calculated as follows: Interest = Principal × Rate × Time = $5,000 × 6% × (30/360) = $25.

On December 1, Martin Company Signed a 90-Day, 6% Note