Question

The Pita Pit borrowed $100,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2022. In connection with this note, The Pita Pit should report interest expense at December 31, 2021, in the amount of:

Answer 1

$2,000

Step-by-step explanation:

Calculation for Pita Pit Interest amount

Borrowed Amount = $100,000

Interest Amount at December 31st 2021

= $100,000*12/100*2/12

= $2,000

Therefore Pita Pit should report interest expense at December 31, 2021, in the amount of:$2,000