On December 1, 2021, Old World Deli signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2022

Finance Apr 25, 2021

On December 1, 2021, Old World Deli signed a $300,000, 5%, six-month note payable with the amount borrowed plus accrued interest due six months later on June 1, 2022. Old World Deli records the appropriate adjusting entry for the note on December 31, 2021. What amount of cash will be needed to pay back the note payable plus any accrued interest on June 1, 2022?

Question 30 options:

$300,000.

$306,250.

$301,250.

$307,500.

Expert Solution

Computation of Cash needed to pay back the note payable plus any accrued interest on June 1, 2022:

Cash Needed to Payback = Notes Payable + Interest on Notes Payable

= $300,000 + ($300,000*5%*6/12)

= $300,000 + $7,500

Cash Needed to payback = $307,500

So, the correct option is D "$307,500". Cash needed to pay back the note payable plus any accrued interest on June 1, 2022 is $307,500.

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