On July 1, 2020 Walker Inc. signed a $600,000, 15 month, 10% note payable. At due date, the principal and interest will be paid. Calculate the amount of interest expense hat Walker Inc. should report on its income statement for the year ended December 31 021. (round to the nearest dollar)
On July 1, 2020 Walker Inc. signed a $600,000, 15 month, 10% note payable. At due date, the principal and interest will be paid. Calculate the amount of interest expense hat Walker Inc. should report on its income statement for the year ended December 31 021. (round to the nearest dollar)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On July 1, 2020 Walker Inc. signed a $600,000, 15 month, 10% note payable. At due
date, the principal and interest will be paid. Calculate the amount of interest expense
that Walker Inc. should report on its income statement for the year ended December 31,
2021. (round to the nearest dollar)
Expert Solution
Step 1
This is based on bill of exchange, in the given case since note is payable in 15 months and the same is drawn on 01 July 2020.
That means 6 months Interest i.e. July 2020 to December 2020 interest will be reported in financial period ends on December 31, 2020 and rest of the period which is 9 months falls in financial period ends on December 31, 2021.
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