Answer:
$1,440
Step-by-step explanation:
Given:
Borrowed amount by west company from valley bank = $48,000
Interest is paid annually = 9% per year
Time period = From 1st September to 31st December
= 4 months
The note issued by West carried an 18-month term.
Therefore,
Interest expense = Principal amount × Rate × Time period
= $48,000 × 9% × (4 ÷ 12)
= $48,000 × 0.09 × (1 ÷ 3)
= $1,440
Therefore, the amount of interest expense that will be reported on West's income statement for Year 1 is $1,440.
