Valix Finacc vol 2 Problem 1-12

Financial Accounting Volume 2 2008 Valix-Peralta
Chapter 1 Problem 1-12

Problem 1-12  Answer  A

Note payable, October 1, 2007                                                                            1,200,000

Less: Payment on October 1, 2008                                                                                      400,000

Balance, October 1, 2008                                                                                         800,000

                                                                                                                                               

Interest paid from January 1 to September 30, 2008

            (1,200,000 x 15% x 9/12)                                                                                  135,000

Interest accrued from October 1 to December 31, 2008

            (800,000 x 15% x 3/12)                                                                                       30,000

Interest expense for 2008                                                                                          165,000