On October 1, 2012, Haywood Company borrowed money by issuing a $12,000 face value discount note to its bank. The note had an 8% discount rate and had a term of 1 year. On December 31, 2012, Haywood should accrue interest expense in the amount of $240.

Question

Quizplus · Accepted Answer

$12,000 x 8% = $960 discount; $960/12 months x 3 months (Oct. 1 - Dec. 31) = $240 interest expense

On October 1, 2012, Haywood Company Borrowed Money by Issuing