Valix Finacc vol 2 Problem 1-14

Financial Accounting Volume 2 2008 Valix-Peralta
Chapter 1 Problem 1-14

Problem 1-14  Answer  C

Accrued interest from March 1, 2007 to February 28, 2008

     (1,000,000 x 12%)                                                                                                  120,000

Accrued interest from March 1 to December 31, 2008                       

     (1,000,000 + 120,000 x 12% x 10/12)                                                                   112,000

Total accrued interest payable, December 31, 2008                                        232,000

If the interest is compounded annually, it means that the accrued interest for one year will also earn interest.