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7 April, 08:11

2. On December 1, a company accepted a $5,000, 4%, 90-day note. How much accrued interest will be recorded as an adjusting entry on December 31, the end of the accounting period?

A. $166.67B. $16.67C. $1.67D. $0.00; interest is not accrued at year-end

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  1. 7 April, 08:16
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    B. $16.67

    Explanation:

    The computation of the accrued interest expense is shown below:

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

    = $5,000 * 4% * (30 days : 360 days)

    = $16.67

    We assume there are 360 days in a year

    And, the 30 days is calculated from December 1 to December 31

    This is the answer and same is not mentioned in the given options
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