On November 1,2018,New Morning Bakery signed a $200,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2019.New Morning Bakery records the appropriate adjusting entry for the note on December 31,2018.What amount of cash will be needed to pay back the note payable plus any accrued interest on May 1,2019?

Question

Quizplus · Accepted Answer

The interest for six months on a $200,000 note at 6% annual interest is calculated as $200,000 * 6% * (6/12) = $6,000. Therefore, the total amount due on May 1, 2019, is the principal of $200,000 plus $6,000 of interest, totaling $206,000.

On November 1,2018,New Morning Bakery Signed a $200,000,6%,six-Month Note Payable