On July 1 2014 Allen Company signed a 140000 oneyear 5 perce

On July 1, 2014, Allen Company signed a $140,000, one-year, 5 percent note payable. The principal and interest will be paid on June 30, 2015. How much interest expense should be reported on the income statement for the year ended December 31, 2014? O $7,000. O $0. $1,750. O $3,500.

Solution

Interest expense to be reported on December 31,2014 = 140000*5%/12*6= 3500 Option 4 is correct