Question

On December 31st, end of current year, ABC Company needs to record 4 months of accrued interest on a loan for $10,000 at 5%. The note payable is not due for another 3 months. What is the amount of Interest Payable accrued on December 31st of the current year (round to the nearest dollar)

Answer 1

Answer:

=$167

Explanation:

Four months accrued interest means 4 months interest that is due

The principal amount is $10,000

interest rate is 5%

time is 4 months

Interest will be 5/100 x $10,000 x 4/12

=0.05 x $10,000 x 0.33333

=$500 x 0.3333

=166.666

=$167