Final answer:
The exact accrued interest expense for Tim's Toys as of December 31, 2024, is calculated to be $545,000 based on the given loan amount, interest rate, and period. However, this answer does not match any of the multiple-choice options provided.
Step-by-step explanation:
The accrued interest expense as of December 31, 2024, for the loan taken by Tim's Toys is calculated based on the principal amount, the interest rate, and the time since the loan was taken. Given that the loan amount is $32,700,000, the interest rate is 10%, and the period in question is two months (November 1 to December 31), we can calculate the accrued interest.
To find the interest for one month, we use the formula:
Interest for one month = Principal × Monthly Interest Rate
Monthly Interest Rate = Annual Interest Rate / 12
Interest for one month = $32,700,000 × (0.10 / 12)
So for two months, it would be double that amount:
Accrued Interest for two months = Interest for one month × 2
Thus, the total accrued interest expense for Tim's Toys as of December 31, 2024, is:
Accrued Interest for two months = $32,700,000 × (0.10 / 12) × 2 = $545,000