On April 1,20A,Allen Company signed a $12,000,one-year,10 percent note payable.At due date,April 1,20B,the principal and interest will be paid.Interest expense should be reported on the income statement (for the year ended December 31,20A)as which of the following?

Question

Quizplus · Accepted Answer

The interest of 10% on a $12,000 note payable for one year is calculated as follows:
$12,000 x 10% = $1,200
Since the note was signed on April 1, 20A, and the interest expense should be reported on the income statement for the year ended December 31, 20A, we need to calculate the interest expense for 9 months:
$1,200 x 9/12 = $900
Therefore, the correct answer is C ($900).

On April 1,20A,Allen Company Signed a $12,000,one-Year,10 Percent Note Payable