Question

On December 1, Victoria Company signed a 90-day. 8% note payable, with a face value of $16, 200. What amount of interest expense is accrued at December 31 on the note?
a. $0
b. $1, 296
c. $216
d. $108
e. $324

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

On December 1,

Victoria Company signed a 90-day. 8% note payable, with a face value of $16, 200

Interest expense on December 31 is accrued for 30 days (Dec 1 - Dec 31)

Interest expense:

= Amount of note payable × Interest rate × Time period

= $16,200 × 8% × (30 ÷ 360)

= $108

Therefore, amount of interest expense is accrued at December 31 on the note is $108.