Fleetwood, Inc. signed a three-year note payable for $59,000 at 7% annual interest. What is the interest expense for 2019 if the note was signed on August 1, 2019? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

To calculate the interest expense for 2019, we need to determine how many months are left in the year after August 1.

There are 5 months remaining in 2019 (August through December).

Interest expense = principal x rate x time
= $59,000 x 7% x 5/12
= $2,912.50

We round this to the nearest dollar, which gives us an interest expense of $2,921.

Therefore, the best choice is B, $1721.