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LenaWriter [7]
3 years ago
9

On January 10, Chen Co. issued an $80,000, 6%, 90-day note payable to Rao Co. Using a 360-day year, what is the total interest e

xpense of the note?a. $4,800b. $480c. None of these choices are correct.d. $1,200
Business
1 answer:
Yanka [14]3 years ago
4 0

Answer:

d. $1,200

Explanation:

The computation of the interest expense is shown below:

= Principal × rate of interest × number of days ÷ (total number of days in a year)

= $80,000× 6% × (90 days ÷ 360 days)

= $1,200

We simply apply the simple interest formula

Since the number of days and the total number of days are given so we considered the same for the computation part.

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