1. Joy’s Bar and Grill completed the following note-payable transactions: 2020 Aug. 1 Purchased kitchen equipment costing $60,000 by issuing a one-year, 5% note. Dec. 31 Accrued interest on the note payable. 2021 Aug. 1 Paid the note payable at maturity. Answer these questions for Joy’s Bar and Grill: 1. How much interest expense must be accrued at December 31, 2020? I don't understand the month parts, 5/12 for example as part of the answer, please explain, I'm confused. 2. Determine the amount of Joy’s final payment on July 31, 2021. 3. How much interest expense will Joy’s report for 2020 and for 2021?
1. Joy’s Bar and Grill completed the following note-payable transactions: 2020 Aug. 1 Purchased kitchen equipment costing $60,000 by issuing a one-year, 5% note. Dec. 31 Accrued interest on the note payable. 2021 Aug. 1 Paid the note payable at maturity. Answer these questions for Joy’s Bar and Grill: 1. How much interest expense must be accrued at December 31, 2020? I don't understand the month parts, 5/12 for example as part of the answer, please explain, I'm confused. 2. Determine the amount of Joy’s final payment on July 31, 2021. 3. How much interest expense will Joy’s report for 2020 and for 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1. Joy’s Bar and Grill completed the following note-payable transactions:
2020
Aug. 1 Purchased kitchen equipment costing $60,000 by issuing a one-year, 5% note.
Dec. 31 Accrued interest on the note payable.
2021
Aug. 1 Paid the note payable at maturity.
Answer these questions for Joy’s Bar and Grill:
1. How much interest expense must be accrued at December 31, 2020? I don't understand the month parts, 5/12 for example as part of the answer, please explain, I'm confused.
2. Determine the amount of Joy’s final payment on July 31, 2021.
3. How much interest expense will Joy’s report for 2020 and for 2021?
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