Question

A company has a $4,000, 270-day, 6%, note payable recorded on its books which was dated July 2, 2013. The interest expense is paid when the note matures. How much interest expense must be accrued on December 31, 2013, which is the end of the accounting period? Assume a 360-day year, use the exact number of days in your calculations, and round your answer to the closest penny.

Answer 1

Interest expense accured = $121.33 (

Step-by-step explanation:

The exact number of days from July 2 through December 31, 2013 is 182 days.

The accrued interest (182/360) x $4,000 x 6% = $121.33