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 record interest expense in 2016 in the amount of:

Question

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The interest for the entire 12-month period is $500,000 * 6% = $30,000. Since the note was signed on November 1, 2015, two months of interest ($5,000) would be recorded in 2015, leaving $25,000 to be recorded in 2016.