Question

Included in Allen Corp.'s balance sheet at June 30, 2021 is a 10%, $4,000,000 note payable. The note is dated October 1, 2019 and is payable in three equal annual payments of $2,000,000 plus interest. The first interest and principal payment was made on October 1, 2020. In Allen's June 30, 2021 balance sheet, what amount should be reported as accrued interest payable for this note

Answer 1

Step-by-step explanation:

The amount that should be reported as accrued interest payable for this note would be calculated as:.

= 4,000,000 × 10% × 9/12

= 4,000,000 × 0.1 × 0.75

= 300,000

The amount should be $300,000.