Question

On July 1, 2008, Blitzer Inc. signed a one-year, 6% interest-bearing note payable for $5,000. Blitzer Inc. has a December 31 yearend. The amount of interest expense that should be reported in the 2008 income statement for this note (rounded to the nearest dollar) would be

Answer 1

interest expense = $150

Step-by-step explanation:

the journal entry to record accrued interest:

December 31, 2018, accrued interest from note payable

Dr Interest expense 150

Cr Interest payable 150

interest expense = principal x interest rate x time = $5,000 x 6% x 6/12 = $150