Question

on november 7, mura company borrows $140,000 cash by signing a 90-day, 10%, $140,000 note payable. 1. compute the accrued interest payable on december 31. 2.

Answer 1

To calculate the accrued interest payable by Mura Company on December 31, use the simple interest formula I = PRT with P as $140,000, R as 10%, and T as the time in years since borrowing (54 days divided by 365). The accrued interest comes to approximately $2,071.00.

Step-by-step explanation:

Computing Accrued Interest Payable on December 31

On November 7, Mura Company borrows $140,000 cash by signing a 90-day, 10%, $140,000 note payable. To compute the accrued interest payable on December 31, the formula for simple interest I = PRT is used, where:

From November 7 to December 31, there are 54 days. Hence,

T = 54/365 ≈ 0.1479 years

Interest = P × R × T = $140,000 × 0.10 × 0.1479 ≈ $2,071.00

The accrued interest payable on December 31 for Mura Company's note payable would be approximately $2,071.00.