Concord Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Concord had the following transactions related to notes payable. Sept. 1 Issued a $14,400 note to Pippen to purchase inventory. The 3-month note payable bears interest of 6% and is due December 1. (Concord uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $22,800, 9%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1. Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note.

Question

Wang

Business

17 September, 21:02

Concord Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Concord had the following transactions related to notes payable. Sept. 1 Issued a $14,400 note to Pippen to purchase inventory. The 3-month note payable bears interest of 6% and is due December 1. (Concord uses a perpetual inventory system.) Sept. 30 Recorded accrued interest for the Pippen note. Oct. 1 Issued a $22,800, 9%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1. Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note.

+4

Answers (1)

Know the Answer?

Isai Howard · Answer 1

Sep 30 (1 month from Sep 1 to Sep 30), accrued interest for the Pippen note is $70 (=$14,000*6%/12*1)

Oct 31 (2 months from Sep 1 to Oct 31), accrued interest for the Pippen note is $140 (=$14,000*6%/12*2)

Oct 31 (1 months from Oct 1 to Oct 31), accrued interest for the Prime Bank is $161 (=$22,800*9%/12*1)

Explanation:

Assuming the interest rate indicated is per annum

The accrued interest = amount of note x interest rate per annum / 12 month x number of months accrued.

For the note to Pippen issued on Sep 1, then it's 1 month at Sep 30 or 2 months at Oct 31

For the note to Prime Bank issued on Oct 1, then it's 1 month at Oct 31