Question

OS Environmental provides cost-effective solutions for managing regulatory requirements and environmental needs specific to the airline industry. Assume that on July 1 the company issues a one-year note for the amount of $5.0 million. Interest is payable at maturity. Required:Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: (Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)Find the interest expense:interest rate fiscal year-end interest expense12% december 31 =10% September 30 =9% october 31 =6% january 31 =

Answer 1

Answer: The answers are given below

Step-by-step explanation:

December 31 has interest rate = 12 % Interest expense will be:

= 5 000 000 × (12/100) × (6 /12)

= 5 000 000 × 0.12 × 0.5

= $ 300,000

September 30 has interest rate = 10 % Interest expense will be:

= 5 000 000 × (10/100) × (3/12)

= 5 000 000 × 0.10 × 0.25

= $ 125,000

October 30 has interest rate = 9% Interest expense will be:

= 5 000 000 × (9/100) × (4/12)

= 5 000 000 × 0.09 × 0.33

= $ 150,000

January 31 has interest rate = 6% Interest expense will be:

= 5 000 000 × (6/100) × (7/12)

= 5 000 000 × 0.06 × 0.583

= $ 175,000