What is the amount of interest expense Central Food's recognizes on this note in 2011?
A) $700.
B) $8,400.
C) $7,700.
D) $1,400.

Question

Quizplus · Accepted Answer

The amount of interest expense recognized can be calculated as follows:
Interest Expense = (Balance * Interest rate * Time)
Where, Balance = $60,000, Interest rate = 11%, and Time = 7/12 (since the note was issued on June 30th).
Therefore, Interest Expense = ($60,000 * 11% * 7/12) = $7,700.

What Is the Amount of Interest Expense Central Food's Recognizes