Jane's Donut Co. borrowed $200,000 on January 1, 2021, and signed a two-year note bearing interest at 12%. Interest is payable in full at maturity on January 1, 2023. In connection with this note, Jane's should report interest expense at December 31, 2021, in the amount of:

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Business

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5 June, 23:08

Jane's Donut Co. borrowed $200,000 on January 1, 2021, and signed a two-year note bearing interest at 12%. Interest is payable in full at maturity on January 1, 2023. In connection with this note, Jane's should report interest expense at December 31, 2021, in the amount of:

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Kelsey Zavala · Answer 1

Jane's should report interest expense at December 31, 2021, in the amount of $ 24000

Explanation:

Interest will be calculated as follows:

Interest from January 1, 2021 to December 31, 2021 = 200000 x 12 %

= 200000 x 12/100

= 200000 x 0.12

= 24,000

$24000 will be reported as interest expense at December 31, 2021