Conner Company borrows $185,600 on November 1, 2013, by signing a 120-day, 8% note

Accounting Mar 26, 2021

Conner Company borrows $185,600 on November 1, 2013, by signing a 120-day, 8% note. What is the total amount of interest that Conner will recognize for this note?

A. $4,949

B. $14,848

C. $2,467

D. $0, no interest expense is recognized

E. $1485

Expert Solution

Answer:

A .

Step-by-Step explanation

Value of note payable as on November 1 = $185600

Rate = 8%

N = 120 days

Interest expense to be recognized at the time of maturity

= 185600 * 8% * 120/360

= $4,949

If accounting year ends on December 31 , than interest will be recognized for

only 60 days (November - December).

Interest to be recognized on December 31 = $185600 *8%*60/360 = $2,475

Thus,correct option is A

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