A company borrowed $100,000 on a one-year, 10% note on September 1, 2013, with interest and principal to be paid at maturity. How much interest payable will be reported on the balance sheet at November 30, 2013?

Question

Quizplus · Accepted Answer

Interest payable is calculated for the period from September 1 to November 30, which is 3 months. The annual interest is $10,000 (10% of $100,000), so for 3 months, it is $2,500 (10,000 * 3/12).

A Company Borrowed $100,000 on a One-Year, 10% Note on September