Homework SourseOn October 14 2012 Fran Co sold 200000 of merchandise to Bil
On October 14, 2012, Fran Co. sold $200,000 of merchandise to Bill Co. Bill gave Fran its 15%, 120-day note for the total.
The amount of accrued interest recognized in an adjusting entry on December 31, 2012 is:
$ 6,500
$ 30,000
$ 6,250
$ 10,000
None of the above
On October 14, 2012, Fran Co. sold $200,000 of merchandise to Bill Co. Bill gave Fran its 15%, 120-day note for the total.
The amount of accrued interest recognized in an adjusting entry on December 31, 2012 is:
$ 6,500
$ 30,000
$ 6,250
$ 10,000
None of the above
On October 14, 2012, Fran Co. sold $200,000 of merchandise to Bill Co. Bill gave Fran its 15%, 120-day note for the total.
The amount of accrued interest recognized in an adjusting entry on December 31, 2012 is:
$ 6,500
$ 30,000
$ 6,250
$ 10,000
None of the above
Solution
Answer: $6500
Calculation of Interest
Days in October = 31-14 = 17 days
Days in November = 30 days
Days in December = 31 days
Total Days = 17+30+31 = 78 days
Interest calculation = 200000 x 15% x 78/360 = $6500
