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24 March, 08:19

On January 10, Chen Co. issued an $80,000, 6%, 90-day note payable to Rao Co. Using a 360-day year, what is the total interest expense of the note? a. $4,800b. $480c. None of these choices are correct. d. $1,200

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  1. 24 March, 08:37
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    d. $1,200

    Explanation:

    The computation of the interest expense is shown below:

    = Principal * rate of interest * number of days : (total number of days in a year)

    = $80,000 * 6% * (90 days : 360 days)

    = $1,200

    We simply apply the simple interest formula

    Since the number of days and the total number of days are given so we considered the same for the computation part.
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Home » Business » On January 10, Chen Co. issued an $80,000, 6%, 90-day note payable to Rao Co. Using a 360-day year, what is the total interest expense of the note? a. $4,800b. $480c. None of these choices are correct. d. $1,200
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