Final answer:
The interest expense that must be accrued on May 31, 2017, for Saturn, Inc.'s $24,000 note payable at 8% interest is $480 (a). The calculation is based on the simple interest formula considering the principal, the annual interest rate, and the number of days from March 1 to May 31.
Step-by-step explanation:
To calculate the amount of interest expense that must be accrued on May 31, 2017, for Saturn, Inc.'s one-year $24,000 note payable at 8% interest, we use the formula for simple interest: Interest = Principal × Rate × Time. In this case, Principal is $24,000, the Rate is 8% (or 0.08 as a decimal), and Time is the number of days from March 1 to May 31 divided by the number of days in a year (assumed to be 365 for this calculation).
First, find the number of days between March 1 and May 31, which is 31 (March) + 30 (April) + 31 (May) = 92 days. Convert the annual rate to a daily rate by dividing 0.08 by 365, and then multiply by the number of days interested is being calculated for (92).
Interest = $24,000 × 0.08 × (92/365) = $480 (rounded to the nearest whole number).
Therefore, the correct answer is A. $480.