Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity. How much interest will Longitude report on its income statement for the year ending December 31? a.$10,000b. $15,000c. $5,000d. $30,000

Option (a) is correct.

Explanation:

Given that,

Note value = $150,000

Rate of interest = 10%

Time period: May 1 to December 31 = 8 months

Therefore, the interest amount upto December 31 is calculated as follows:

= Note value * Rate of interest * Time period

= $150,000 * 10% * (8 : 12)

= $150,000 * 0.1 * 0.67

= $10,000

Hence, interest of $10,000 will Longitude report on its income statement for the year ending December 31.