[The following information applies to the questions displayed below.]

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.

-What is the amount of interest expense and the cash outflow for interest during the year ending December 31,Year 1?
Interest Expense$\quad $$\quad $$\quad $$\quad $$\quad $ Cash Outflow

Question

[The following information applies to the questions displayed below.]

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.

-What is the amount of interest expense and the cash outflow for interest during the year ending December 31,Year 1?
Interest Expense$\quad $$\quad $$\quad $$\quad $$\quad $ Cash Outflow

Quizplus · Accepted Answer

Year 1 Interest expense = $80,000 × 9% × 5/12 months = $3,000
At December 31,Year 1,the accrual of interest expense does not affect cash flows.At maturity (in Year 2),the payment of interest will be reported as a cash outflow from operating activities.

[The Following Information Applies to the Questions Displayed Below \quad

[The Following Information Applies to the Questions Displayed Below $\quad$