Question

Q 5.35: On September 1, 2015, Barclay Spa borrowed $500,000 to renovate the massage therapy area of the facility. The terms of the loan were 6% annually over 10 years. Determine how the interest would appear on Barclay’s pro-forma balance sheet at December 31, 2015. Interest Expense – $12,0000 B : Interest Payable – $12,000 C : Interest Expense – $10,000 D : Interest Payable – $10,000

• Interest Expense – $12,0000

• B  :

  Interest Payable – $12,000

• C  :

  Interest Expense – $10,000

• D  :

  Interest Payable – $10,000

Answer 1

Interest expense = Amount*Rate*Time Accrued

= 500000*6%*4/12

Interest expense = 10000

So answer is d) Interest payable - $10000