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Aleks04 [339]
3 years ago
11

The Southwest Clothing Company borrowed a sum of cash on October 1, 2016 and signed a note payable. The annual interest rate was

12% and the company's year Income Statement (accounting period ending December 31) reported interest expense of 1.260 € related to that note. What was the amount borrowed?
Business
1 answer:
Tom [10]3 years ago
5 0

Answer:

$42,000

Explanation:

Calculation for the amount borrowed

Amount borrowed=$1,260/(12% x 3/12)

Amount borrowed=$1,260/0.03

Amount borrowed=$42,000

Note that October 1, 2016 to 31 December 2016 will gives us 3 months

Based on the above calculation $42,000 which is the amount borrowed x 12% x 3/12 = Interest expense amount of $1,260

Therefore the amount borrowed is $42,000

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Answer:

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GIven:

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Estimated change in cash = Net income + Depreciation expense - Accounts receivable balance increased

Estimated change in cash = 200,000 + 60,000 - 40,000

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