Kennesaw Corporation borrowed $90,000 by issuing a 12%,six-month note payable,all due at the maturity date.After one month,the company's total liability for this loan amounts to:

Question

Quizplus · Accepted Answer

In one month, the note payable would have accrued interest for 1/6 of the year (since it is a 6-month note) which is 1/6 * 12% = 2%.

So the interest accrued in one month would be 2% of $90,000 = $1,800.

Adding this to the original loan amount of $90,000 gives a total liability of $91,800.

Therefore, the correct answer is choice B.

Kennesaw Corporation Borrowed $90,000 by Issuing a 12%,six-Month Note Payable,all