On July 1,2019,Allen Company signed a $100,000,one-year,6 percent note payable.The principal and interest will be paid on June 30,2020.How much interest expense should be reported on the income statement for the year ended December 31,2019?

A) $6,000.
B) $3,000.
C) $1,500.
D) $0.

Question

Nicci Betteo · Accepted Answer

Final Answer : B, Explanation :  The interest expense for the year ended December 31, 2019 will be calculated on the outstanding principal balance for six months (July to December).Interest expense = Principal balance x Interest rate x Time= $100,000 x 6% x 6/12= $3,000Therefore, the answer is B) $3,000.

On July 1,2019,Allen Company signed a $100,000,one-year,6 percent note payable.The principal and interest will be paid on June 30,2020.How much interest expense should be reported on the income statement for the year ended December 31,2019?

A) $6,000.
B) $3,000.
C) $1,500.
D) $0.

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On July 1,2019,Allen Company signed a $100,000,one-year,6 percent note payable.The principal and interest will be paid on June 30,2020.How much interest expense should be reported on the income statement for the year ended December 31,2019?A) $6,000.B) $3,000.C) $1,500.D) $0.

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Learning Objectives

Learning Objectives

Related questions

On July 1,2019,Allen Company signed a $100,000,one-year,6 percent note payable.The principal and interest will be paid on June 30,2020.How much interest expense should be reported on the income statement for the year ended December 31,2019?

A) $6,000.
B) $3,000.
C) $1,500.
D) $0.