Final answer:
The impact to ABC's income statement for the year ended December 31, 2022, due to the loan, is a total interest expense of $500.01, calculated based on a 10% annual interest rate on a $20,000 loan over three months (October to December).
Step-by-step explanation:
The student is asking about the impact to the income statement of ABC's loan interest expense for the year ended December 31, 2022. The loan was for $20,000 with a 10% annual interest rate, calculated monthly, taken on October 1, 2022, and to be repaid by March 31, 2023. To find the impact on the 2022 income statement, we need to calculate the interest for October, November, and December of 2022.
First, we divide the annual interest rate by 12 to get the monthly rate, which is 10%/12 = 0.833% per month. Next, we multiply the monthly interest rate by the loan principal to find the interest for one month: 0.833% of $20,000 = $166.67. Since the loan affects three months of the year in question, we multiply the monthly interest by three: $166.67/month * 3 months = $500.01 total interest expense.
Therefore, the total impact to the income statement for ABC for the year ended December 31, 2022, due to this loan is $500.01 in interest expenses.