Universal Travel,Inc.borrowed $500,000 on November 1,2015,and signed a twelve-month note bearing interest at 6%.Principal and interest are payable in full at maturity on October 31,2016.In connection with this note,Universal Travel,Inc.should report interest payable at December 31,2015,in the amount of:

Question

Quizplus · Accepted Answer

The interest payable at December 31, 2015, can be calculated by multiplying the borrowed amount ($500,000) by the interest rate (6%) and then dividing by the number of months in a year (12).

$500,000 x 6% / 12 = $5,000

Therefore, the correct answer is choice letter C, $5,000.