Universal Travel Inc.borrowed $500,000 on November 1,2016,and signed a 12-month note bearing interest at 6%.Interest is payable in full at maturity on October 31,2017.In connection with this note,Universal Travel Inc.should report interest payable at December 31,2016,in the amount of:

Question

Quizplus · Accepted Answer

Interest payable on December 31, 2016 would be for 2 months (November and December). Thus, the calculation of interest payable would be: 
$500,000 x 6% x 2/12 = $5,000