On October 1, 2016, Donna Equipment signed a one-year, 10% interest-bearing note payable for $57,000. Assuming...
On October 1, 2016, Donna Equipment signed a one-year, 10% interest-bearing note payable for $57,000. Assuming that Donna Equipment maintains its books on a calendar year basis, how much interest expense should be reported in the 2017 income statement?
Homework Answers
| Interest Expense in 2016 ($57,000*10/100*3/12 months) (From October to December) | $1,425 |
| Interest Expense in 2017 ($57,000*10/100*9/12 months) (January to September 30th) | $4,275 |
Therefore, interest expense should be reported in the 2017 income statement is $4,275.
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