Question

Renard Co. issued a note payable to National Bank on September 1, 2018, in the amount of $900,000. The note bears interest at 9% and is payable in three equal annual principal payments of $300,000. On the opening date, the bank's prime rate was 8%. The first payment for interest and principal was made on September 1, 2019. What will Renard record for accrued interest payable on December 31, 2019

Answer 1

Answer: accrued interest payable on December 31, 2019=$16,000

Step-by-step explanation:

Principal Amount left as of 31st December = $900,000 - $300,000 = $600,000

Therefore

Amount of Accrued Interest Payable = Principal(Amount) x Rate x Time (1st September 2019 till 31st December 2019)

$600,000 X 8% X 4/12

= $16,000