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On September 1, 2012, Lowe Co. issued a note payab...

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On September 1, 2012, Lowe Co. issued a note payable to National Bank in the amount of $900,000, bearing interest at 12%, and payable in three equal annual principal payments of $300,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2013. At December 31, 2013, Lowe should record accrued interest payable of A) $36,000. B) $22,000. C) $24,000. D) $33,000.,Thank you for the solution. I'm curious why your solution notes interest at 6 months given that Sept 1, 2013 represents 4 months to December 31, 2013. I had approached this by adding $24k of accrued interest on the entire $900k note from January 1, 2013 to August 31, 2013 (8 months) + $12k of accrued interest from September 1, 2013 to December 31, 2013 (4 months). Thank you for clarifying

 

Paper#3641 | Written in 18-Jul-2015

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