Question

Universal Travel, Inc. borrowed $500,000 on November 1, 2021, and signed a twelve-month note bearing interest at 6%. Principal and interest are payable in full at maturity on October 31, 2022. In connection with this note, Universal Travel, Inc. should report interest payable at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)

Answer 1

$5,000

Step-by-step explanation:

Calculation to determine what Travel, Inc. should report as interest payable at December 31, 2021

Interest payable at Dec 31,2021= $500,000 * 6% * 2 months/12 months

Interest payable at Dec 31,2021= $5,000

(November 1 - December 31 = 2 months)

Therefore Travel, Inc. should report interest payable at December 31, 2021, in the amount of:$5,000