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Ray Of Light [21]
3 years ago
9

Fiat borrowed $80,000 on October 1, 2019. Fiat will not make any payments until October 1, 2021, and at that time, Fiat will pay

$84,000. Which of the following correctly states the annual financial statements as of December 31, 2020.a. A Interest payable of $2,500; interest expense of $2,500 b. Interest payable of $1,500; interest expense of $2,000 c. Interest payable of $4,000; interest expense of $2,500 d. Interest payable of $2,500; interest expense of $2,000
Business
1 answer:
natita [175]3 years ago
8 0

Answer:

The answer is d. Interest payable of $2,500; interest expense of $2,000

Explanation:

Interest component over 2 years = $84,000- $80,000 = $4000

interest expense for a year = 4000/2 = $2000

Interest payable = 1.25 years   * 2000 = $2500

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Complete Question:

Use the following scenario to answer the following questions:

In 2011, three firms were selling cellular phone service for a price of $40 per month in Pittsburgh, Pennsylvania. Each firm serviced 100 cell phone customers; thus, all firms together serviced a total of 300 customers. In 2012, five firms were selling cellular phone service for a price of $30 per month. Each firm serviced 70 cell phone customers; thus, all firms together serviced a total of 350 customers. Assume marginal cost is $0 (zero) for all firms and thus total revenue is equal to total profit.

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