Final answer:
The interest expense for A1 Trading Post, LLC for the year ended December 31, 2017, is $9,866.67, which is calculated by prorating the annual interest $14,800 for the 8 months the note was in effect during that year.
Step-by-step explanation:
The student is asking how to calculate the interest expense for A1 Trading Post, LLC that issued a one-year 5% $296,000 note on April 30, 2017, for the year ended December 31, 2017.
To find the interest expense, we multiply the principal amount by the interest rate and then adjust it for the portion of the year that applies.
In this case, the note was issued on April 30, 2017, and the year-end is on December 31, 2017, which is a period of eight months. The calculation would be $296,000 x 5% x (8/12).
First, calculate the annual interest by multiplying the principal by the interest rate:
$296,000 x 5% = $14,800 (annual interest)
Next, prorate this annual interest for the 8 months out of the 12-month period the note was held:
$14,800 x (8/12) = $9,866.67
Therefore, the interest expense for the year ended December 31, 2017, is $9,866.67.