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18 October, 07:48

On December 31st, end of current year, ABC Company needs to record 4 months of accrued interest on a loan for $10,000 at 5%. The note payable is not due for another 3 months. What is the amount of Interest Payable accrued on December 31st of the current year (round to the nearest dollar)

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  1. 18 October, 08:15
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    =$167

    Explanation:

    Four months accrued interest means 4 months interest that is due

    The principal amount is $10,000

    interest rate is 5%

    time is 4 months

    Interest will be 5/100 x $10,000 x 4/12

    =0.05 x $10,000 x 0.33333

    =$500 x 0.3333

    =166.666

    =$167
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