Jane\'s Donut Co. borrowed $197,000 on January 1, 2013, and signed a two-year no

Question

Jane's Donut Co. borrowed $197,000 on January 1, 2013, and signed a two-year note bearing interest at 9%. Interest is payable in full at maturity on January 1, 2015. In connection with this note, Jane's should report interest expense at December 31, 2013, in the amount of:

Jane's Donut Co. borrowed $197,000 on January 1, 2013, and signed a two-year note bearing interest at 9%. Interest is payable in full at maturity on January 1, 2015. In connection with this note, Jane's should report interest expense at December 31, 2013, in the amount of:

Explanation / Answer

Answer :-

Borrowed Amount (1-jan.-2013) = $197000

Interest Rate = 9% per annum

Interest exp. at (31-dec.-2013) = Loan amount *Interest rate per annum

= 197000 * 9% p.a.

= $17730

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