Saturn Inc.signed a one-year $12,000 note payable at 8% interest on May 1,2015.How much interest expense must be accrued on May 31,2015?

Question

Quizplus · Accepted Answer

The interest expense for the month of May can be calculated using the following formula:

Interest Expense = (Principal x Rate x Time)

Where:
Principal = $12,000
Rate = 8% per annum or 0.08/12 = 0.0067 per month
Time = 1 month

Substituting these values, we get:

Interest Expense = ($12,000 x 0.0067 x 1) = $80

Therefore, the correct answer is C) $80.