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Edit View History Bookmarks People Window Help File 82% Sun 2:23. Take a Test Garlyn Smith secure https:llwww.mathx.com/student/playerTest.aspx?testld-15231 15368centerwin yes ACCT 2013 14W Spring 2017 Test Final Exam Time Remaining: 00:39:11 Submit Test This Question: 1 pt 26 of 48 (22 complete) v This Test: 48 pts possible E Question Help on March 1, 2016, Emerson Services issued a 3% long-term notes payable for s18.000. It is payable over a 3year term in s6.000 annual principal payments on March 1 of each year plus interest, beginning March 1. 2017. Each yearly installment wil include principal repayment of $6,000 and interest payment for the preceding one-year period. On March 1, 2017. The accounting period ends on December 31. O A. Emerson will receive $6,000 as an installment payment O B. Emerson must pay $540 of interest to the note holder O c. Emerson must accrue the coming $6,000 as the current portion of principal p O D. Emerson must accrue $6,000 of Interest Expense Click to select your answer.

Explanation / Answer

Given that on March 1 2016 Emerson services issued a 3%long term notes for $18,000.It is payable over a 3 year term in $6000.So, on March 1 2017, installment includes both principal repayment of $6000 and interest payment on principal amount of $18000 for the first year at the rate of 3%.

Calculating the interest on the principal amount of $18000 from the formula I=PTR/100;

Where P=18000,T=1year,R=3%

Substituting the values gives I=(18000*1*0.03)=$540.

Hence option B is correct answer.(he must pay $540 of interest to the note holder)

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