Kieso Company borrowed $600,000 on a 90-day note at 11 percent interest. The mon
ID: 2461449 • Letter: K
Question
Kieso Company borrowed $600,000 on a 90-day note at 11 percent interest. The money was borrowed for 30 days in 2011 and 60 days in 2012; the note and interest were to be paid upon maturity in 2012. (Assume 360 days in a year.)
How much interest expense, if any, would be reported in 2011 and in 2012?
Kieso Company borrowed $600,000 on a 90-day note at 11 percent interest. The money was borrowed for 30 days in 2011 and 60 days in 2012; the note and interest were to be paid upon maturity in 2012. (Assume 360 days in a year.)
Explanation / Answer
Interest expense = 600000 * 11% * 30 / 360 = 5500
= 600000 * 11% * 60 / 360 = 11000
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