Respuesta :
Answer:
$1620
Explanation:
Assumption: The company follows calendar year for accounting purpose.
Given: Amount borrowed = $24000
Rate of interest = 9% per annum
Interest relating to year 1 ending on Dec 31, = 24000 × 9% × [tex]\frac{3\ months}{12\ months}[/tex]
= $540
The journal entry would be:
Interest expense Dr. 540
To interest payable 540
(being interest payable recorded)
In the second year , the interest expense would be the remaining i.e
total interest $24000 × 9% × [tex]\frac{9}{12}[/tex] = $1620
Interest Expense Dr. 1620
Interest Payable Dr. 540
Notes Payable Dr. 24,000
To Cash A/C 26,160
(Being notes payable and interest paid recorded)
Hence, the amount of interest expense to be reported in year 2 is $1620
