When the interest payment dates are March 1 and September 1, and notes are issued on July 1, the amount of interest expense to be accrued at December 31 of the year of issue would:
A)Not be required.
B)Be for six months.
C)Be for four months.
D)Be for ten months.

Question

Quizplus · Accepted Answer

Since the notes are issued on July 1 and the interest payment dates are March 1 and September 1, there are four months left until the end of the year (i.e. from July 1 to December 31). Therefore, the amount of interest expense to be accrued at December 31 of the year of issue would be for four months. If the notes had been issued on January 1, then the interest expense to be accrued at December 31 of the year of issue would be for ten months (i.e. from January 1 to December 31).

When the Interest Payment Dates Are March 1 and September