On July 1, 2018, Ross-Livermore Industries issued nine-month notes in the amount of $400 million. Interest is payable at maturity.
Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions:
|Interest Rate||Fiscal Year-End|
The expense to be considered for the period is computed by multiplying the face value of the note payable with the period and the periodic interest rate.
Answer and Explanation:
Determine the amount of interest expense that should be recorded in a year-end adjusting entry as follows: -
|Computation for Interest Expense (in million)|
|Assumptions||Interest Rate (a)||Fiscal Year-End||Period (in months) (b)||Interest Expense (a x b/12 x 400 million)|
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 18