On October 1, Dalton Corp. borrows $100,000 from National Bank, signing a six-month note payable for that amount, plus interest to be computed at a rate of 9% per annum. Indicate all correct answers.
A) Dalton's liability at October 1 is only $100,000.
B) The maturity value of this note is $104,500.
C) At December 31, Dalton will have a liability for accrued interest payable in the amount of $4,500.
D) Dalton's total liability for this loan at November 30 is $101,500.

Question

Quizplus · Accepted Answer

D  A) On October 1, Dalton's liability is only the principal amount of $100,000 as interest has not yet accrued.  D) By November 30, two months of interest have accrued, which is $1,500 (calculated as $100,000 * 9% * 2/12), making the total liability $101,500.