Sonya company borrowed $175,000 on Apr 1, 2011

Accounting Sep 15, 2020

Sonya company borrowed $175,000 on Apr 1, 2011. the note requires interest at 12% and principal to be paid after one year. How much interest expense is recognized on Dec 31, 2011?

Expert Solution

Computation of Interest Expenses on December 31, 2011:

From April 1 to December 31 = 9 months

Interest for 9 months = $175,000 * 12% * 9 months / 12 = $15,750

So, Interest expense recognized on Dec 31, 2011 is $15,750.

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