Question

On June 30, 2019 Martin Corp.’s balance sheet included a 10%, $3,000,000 note payable. The note is dated October 1, 2017, and is payable in three equal annual payments of $1,000,000 plus interest. The first interest and principal payment was made on October 1, 2018. In Martin's June 30, 2019 balance sheet, the accrued interest payable for this note will be _________.

Answer 1

Answer:

$225,000

Explanation:

Data provided in the question:

Note payable = 10%, $3,000,000

Payment amount = $1,000,000

Now,

Since the first payment is made in the month of October

Therefore,

Duration from October 2018 to October 2019 = 9 months = $\frac{9}{12}$ years

Therefore,

Interest payable for 2019 will be = $3,000,000 × 0.10 × $\frac{9}{12}$

= $225,000