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On Oct

Accounting

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

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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