Boat Company signed a 12-month, $40,000, 8% note on June 1, 2012. The amount of interest to be accrued on December 31, 2012, is (round to nearest dollar):

Question

Quizplus · Accepted Answer

The interest for 6 months (from June 1 to December 31) is calculated using the formula:

Interest = (principal x rate x time) / 12

Interest = ($40,000 x 8% x 6 months) / 12

Interest = $1,600

Therefore, the amount of interest to be accrued on December 31, 2012, is $1,600, which is closest to choice C (rounded to nearest dollar).

Boat Company Signed a 12-Month, $40,000, 8% Note on June