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baherus [9]
3 years ago
15

Saturn, Inc. signed a oneminusyear $ 36,000 note payable at 8​% interest on March​ 1, 2017. How much interest expense must be ac

crued on May​ 31, 2017?​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest whole​ number
Business
1 answer:
nexus9112 [7]3 years ago
3 0

Answer:

May 31 2017   Interest expense    720 Dr

                          Interest Payable      720 Cr

Interest expense of 720 is accrued on May 31 2017.

Explanation:

The notes provides 8% interest rate which is the annual interest rate. The total interest on the one year note is 36000 * 0.08 = 2880 which is payable at the end of the term when the note payable is due. However, if the company prepares adjusting entry on a monthly basis or at the end of the period, it will record the interest expense that relates to that period and accrue it.

Till may 31 2017, 3 months have passes and the interest for 3 months is accrued which comes out to be 2880 * 3/12 = $720

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