Ask Question
10 June, 11:33

If there is a cash shortage, the company borrows money. If a surplus occurs funds are used to repay loans or to invest in short-term assets. All borrowing, repayments, and interest payments occur on the last day of the month. The interest rate is 1% per month. The company had no debt before January 1st. The amount of interest expense incurred for January is:

+2
Answers (1)
  1. 10 June, 12:12
    0
    Nil

    Explanation:

    Given that,

    There is a cash shortage.

    All borrowing, repayments, and interest payments occur on the last day of the month.

    Interest rate = 1% per month

    Debt = No debt before 1st January

    The amount is borrowed at the end of the month of January and interest is paid in the following month i. e February.

    Hence, the amount of interest expense incurred for January is nothing, it means zero.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “If there is a cash shortage, the company borrows money. If a surplus occurs funds are used to repay loans or to invest in short-term ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers