Question

Craig borrowed $800,000 on October 1, 2020 and is required to pay $825,000 on March 1, 2021, 28.

a. What amount is the note payable recorded at on October 1, 2020?
b. How much interest is recognized from October 1 to December 31, 2020?

Answer 1

A.$800,000

B. $15,000.

Step-by-step explanation:

a. Based on the information given we were told that Craig borrowed the amount of $800,000 on October 1, 2020 which means that the $800,000 will be t the note payable that will be recorded at on October 1, 2020

b. Calculation for How much interest is recognized from October 1 to December 31, 2020.

Interest Recognized= ($825,000-$800,000)* 3/5

Interest Recognized= $25,000*3/5

Interest Recognized= $15,000

Note that October 1 to December 31, 2020 will give 3 months

Therefore How much interest is recognized from October 1 to December 31, 2020 is $15,000