Question

Required information [The following information applies to the questions displayed below] Omega Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31: (1) A one-year bank loan of $690.000 at an annual interest rate of 12% had been obtained on December 1. (2) The company pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay amounting to $6,300. (3) On December 1, rent on the office building had been paid for four months. The monthly rent is $5,500. (4) Depreciation of office equipment is based on an estimated useful life of six years. The balance in the Office Equipment account is $14,760; no change has occurred in the account during the year. (5) Fees of $9,300 were earned during the month for clients who had paid in advance

Answer 1

Interest Expense on the Bank Loan

=690,000 x 12% x 1/12

=6,900

So Correct Answer is 6,900