Question

Greener Pastures Corporation borrowed $1,550,000 on November 1, 2012. The note carried a 9 percent interest rate with the principal and interest payable on June 1, 2013.

Note issued on Nov 1, interest accrual on Dec 31

Answer 1

The subject of this question is Business at a College level.

Step-by-step explanation:

The subject of this question is Business at a College level. The question is asking about Greener Pastures Corporation and its borrowing details.

Greener Pastures Corporation borrowed $1,550,000 on November 1, 2012, with a 9% interest rate. The principal and interest of the note were payable on June 1, 2013. The question also mentions the interest accrual on December 31, which implies that interest was being calculated from that date onwards.

Answer 2

The interest expense accrued on the note issued by Greener Pastures Corporation on November 1, 2012, would be recognized for the period from November 1 to December 31, 2012.

Step-by-step explanation:

Interest accrual is the accounting process of recognizing interest as it is earned or incurred, irrespective of when it is paid. In this scenario, since the note was issued on November 1, 2012, and interest is typically calculated based on the outstanding principal, the interest expense would accrue from November 1 to December 31, 2012.

It is important to note that the interest is accruing even though the payment is not due until June 1, 2013.

Accruing interest allows financial statements to reflect the economic reality of the transaction, providing a more accurate representation of the company's financial position and performance during a specific period.