Thomas Company borrowed $30,000 on March 1,2019.Thomas signed a 2-year 6% interest-bearing note.What is the adjustment amount to accrue interest on December 31,2020?
A)$1,800.
B)$3,600.
C)$300.
D)$1,200.

Question

Quizplus · Accepted Answer

The interest for one year on a $30,000 note at 6% is $1,800 ($30,000 * 6%). Since the question asks for the interest accrued by December 31, 2020, and the note was taken out on March 1, 2019, this covers a period of almost two years. However, the adjustment amount specifically requested is for the year ending December 31, 2020, which means we only calculate the interest for one year, making the correct answer $1,800.

Thomas Company Borrowed $30,000 on March 1,2019