West Company borrowed $40,000 on September 1, Year 1 from the Valley Bank

Accounting Nov 22, 2020

West Company borrowed $40,000 on September 1, Year 1 from the Valley Bank. West agreed to pay interest annually at the rate of 9% per year. The note issued by West carried an 18-month term. Based on this information the amount of interest expense appearing on West's Year 1 Income statement would be:

Multiple Choice O $0. $360. O $900. O $1,200.

Expert Solution

Correct option is: d. $1,200Workings:Interest expense for Year 1=$40000 X 9% X 4/12=$ 1,200

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