Question

on december 1, victoria company signed a 90-day, 4% note payable, with a face value of $5,400. what amount of interest expense is accrued at december 31 on the note? (use 360 days a year.) multiple choice $0 $216 $54 $18 $36

Answer 1

$54 is accrued at December 31 on the note. Thus, option C is correct.

What is an expense?

An expense is something that calls for the transfer of funds, or wealth in particular, from one individual or entity to a different as repayment for a good, commodity or another type of price.

The information that is provided is:

victoria company signed for 90-day

face value of $5,400

note payable is 4%

Interest payment on December 31 is accrued for 30 days (Dec 1 - Dec 31)

The interest expense formula will be as:

= Amount of note payable × Interest rate × Time period

= $5,400 × 4% × (90 ÷ 360)

= $54

Therefore, option C is the correct option.

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