What is the amount of the interest expense Able will recognize on this note in 2019?
A)$18,000
B)$31,500
C)$36,000
D)$54,000

Question

Quizplus · Accepted Answer

The formula to calculate interest expense is: principal amount x annual interest rate x time period.

In this case, the principal amount is $900,000, the annual interest rate is 8%, and the time period is one year.

Plugging these values into the formula:

$900,000 x 8% x 1 = $72,000 (total interest for the year)

However, Able had already paid $36,000 in interest when they made the first payment on January 1, 2019. So, the amount of interest expense Able will recognize on this note in 2019 will be:

$72,000 - $36,000 = $36,000

Therefore, the answer is C.

What Is the Amount of the Interest Expense Able Will