During the past few years, ABC Company has taken out the following loans from the bank:...

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Question

During the past few years, ABC Company has taken out the following loans from the bank:...

During the past few years, ABC Company has taken out the
following loans from the bank:

1)  On October 1, 2025, ABC Company borrowed $162,000 on
    an 18%, 11-month note payable

2)  On June 1, 2026, ABC Company borrowed $134,000 on a
    12%, 9-month note payable

Calculate the total amount of interest expense related to
these two loans that ABC Company would report in its 2026
income statement assuming a year-end of December 31.

business accounting

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Answer 1

Answer #1

Interest expense = ($162,000 * 18% * 8 / 12) + ($134,000 * 12% * 7 / 12)

= $19,440 + $9,380

= $28,820

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Answer 2

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