On December 31,20A,Bennett recorded an adjusting entry to account for interest that had accrued on the note.What is the approximate amount of interest expense that would have accrued at December 31,20A?
A)$25,400
B)$32,000
C)$76,200
D)$96,000

Question

Quizplus · Accepted Answer

The interest expense that would have accrued at December 31, 20A is approximately $25,400. This is because the note has a face value of $1,000,000 and an interest rate of 5%. The interest expense for one year would be $1,000,000 * 5% = $50,000. Since the note was issued on July 1, 20A, the interest expense that would have accrued at December 31, 20A is $50,000 * 6/12 = $25,400.

On December 31,20A,Bennett Recorded an Adjusting Entry to Account for Interest