Pane Co. had the following borrowings on its books at the end of the current yea
ID: 2560252 • Letter: P
Question
Pane Co. had the following borrowings on its books at the end of the current year: •
$100,000, 12 percent interest rate, borrowed five years ago on September 30; interest payable March 31 and September 30. •
$75,000, 10 percent interest rate, borrowed two years ago on July 1; interest paid April 1, July 1, October 1, and January 1. •
$200,000, noninterest-bearing note, borrowed July 1 of current year, due January 2 of next year; proceeds $178,000.
What amount should Pane report as interest payable in its December 31 balance sheet?
Question 14 options:
$4875
$6750
$26875
$41500
$4875
$6750
$26875
$41500
Explanation / Answer
Interest on $100,000 ($100,000 x 12% x 3/12) $3,000
Interest on $75,000 ($75,000 x 10% x 3/12) $1,875
Total interest payable on December 31 $4,875
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