Question

hi please help me find the correct answer to interest expense. -15600 or (15600) was the wrong answer

Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $260,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: $480,000 Cash collected for: Services to customers Cash paid for Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $196,000 41,000 25,000 8,000 36,000 306,000 $174,000 You are able to determine the following information about accounts receivable, prepaid expenses, and accrued liabilities: January 1, 2021 $ 37,000 Accounts receivable Prepaid insurance Supplies Accrued liabilities (for miscellaneous expenses) December 31, 2021 $29,500 3,600 3,350 2,600 4,000 6.000 In addition, you learn that the bank loan was dated September 30, 2021, with principal and interest at 6% due in one year. Depreciation on the company's equipment is $15,000 for the year. Required: Prepare an accrual basis income statement for 2021. (Ignore income taxes.)

Answer 1

Solution: 3900 Interest expense 260000*6%*3/12