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On Oct
On Oct. 1, 2021 Bianca Inc. signed a 1-year $75,000 note payable from Prime National Bank. The loan plus 4% interest is to be repaid on Sept. 30, 2022. Bianca's year-end is December 31. In its 2021 financial statements, Bianca will record an interest expense of
a.$1,000
b.$3,000
c.$250
d.$750
e.$3,375
Expert Solution
Computation of the interest expense:-
Interest expense = $75,000 * 4% * 3 / 12
= $750
Note:- October 1, 2021 to December 31, 2021 = 3 months
Correct option is d). $750
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