Longitude Company borrowed on a two-year,10%,$150,000 note on May 1,with interest and principal to be paid at maturity.How much interest will Longitude report on its income statement for the year ending December 31?

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The interest for one year on a $150,000 note at 10% is $15,000. However, since the note was taken out on May 1, only 8 months of interest accrues within the year ending December 31. Thus, the interest for 8 months is $150,000 \times 10\% \times \frac{8}{12} = $10,000.$

Longitude Company Borrowed on a Two-Year,10%,$150,000 Note on May 1,with