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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 9, Problem 21MC
Textbook Problem
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A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time?

A. $7,150

B. $65,000

C. $14,300

D. $2,383

To determine

Concept introduction:

Financial accounting or reporting is used to prepare financial statements to present the financial position of the entity. Financial accounting is mandatory for an entity and it has to follow Generally Accepted Accounting Policies (GAAP) for accounting. The statements produced under financial accounting include the Income statement, balance sheet and statement of cash flows. Users for financial information can be internal as well as external like Lenders, Creditors, Government, Employees, and Owners etc.

To choose:

The amount of interest.

Explanation of Solution

The amount of interest is calculated as follows:

Principal amount = $130,000

Interest Rate = 11%

Interest Period = 6 months

Interest = Principal * Interest rate * Period

Interest =

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Chapter 9 Solutions

Principles of Accounting Volume 1
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