Question

On July 8, Jones Inc. issued an $62,900, 9%, 120-day note payable to Miller Company. Assume that the fiscal year of Jones ends on July 31. Using the 360-day year, what is the amount of interest expense recognized by Jones in the current fiscal year

Answer 1

The amount of interest expense recognized by Jones in the current fiscal year is $361.675

Step-by-step explanation:

According to the given data Jones Inc. issued an $62,900, 9%, 120-day note payable to Miller Company On July 8, therefore if the the fiscal year of Jones ends on July 31 there 23 days between July 8 and July 31.

So, to calculate the amount of interest expense recognized by Jones in the current fiscal year we would have to make the following calculation:

Interest expense=$62,900*9%*(23/360)

Interest expense=$361.675

The amount of interest expense recognized by Jones in the current fiscal year is $361.675