Phipps Company borrowed $25,000 cash on October 1, 2016, and signed a nine-month, 8% interest-bearing note payable with interest payable at maturity. The amount of interest expense to be reported during 2017 is which of the following?
A)$1,000.
B)$300.
C)$500.
D)$750.

Question

Quizplus · Accepted Answer

Interest expense = Principal x Rate x Time= $25,000 x 8% x 9/12= $1,000

Phipps Company Borrowed $25,000 Cash on October 1, 2016, and Signed