Answer:
$5,090
Explanation:
The matching principle in accounting requires use to record incomes and expenses in the period in which they occur or incur.
Therefor, Universal Travel Inc. should report interest that expired between November 1, 2018 and December 31, 2018 as at December 31, 2018 report
Interest payable calculation :
Period = November 1, 2018 to December 31, 2018,
= 2 months expired
Annual interest = $509,000 x 6% x 12/12
= $30,540
Interest payable = $30,540 x 2/12
= $5,090
Conclusion :
Interest payable at December 31, 2018 should be reported as $5,090
