Question

makes their first monthly payment (including principal and interest), what amount will they record into their interest expense account

Answer 1

Answer:

The amount Highest Cost Contractors will record into their interest expense account is $60.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

The Highest Cost Contractors, Inc. took out an installment loan on 11/1 in the amount of $12,000 for 61 months with an annual interest rate of 6%. On 11/31 when Highest Cost Contractors makes their first monthly payment (including principal and interest), what amount will they record into their interest expense account?

The explanation of the answer is now provided as follows:

The amount of interest can be calculated as follows:

Amount of interest to record = Amount of installment loan * (Annual interest rate / Number of months in a year)

Amount of interest to record = $12,000 * (6% / 12)

Amount of interest to record = $60

Therefore, the amount Highest Cost Contractors will record into their interest expense account is $60.