Question

Maggie Sharrer Company borrows $88,500 on September 1, 2022, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31, 2022?

Answer 1

The accrued interest at December 31, 2022 amounts to $3,540

Step-by-step explanation:

Accrued Interest = Amount borrowed × rate × Number of months/ 12

where

amount borrowed is $88,500

rate is 12%

= $88,500 × 12% × 4/12

= $3,540

The accrued interest for one year note is $3,540

Note: Number of months from September to December will be 4 months that is September, October, November and December.