Question

Caars Inc. issued a 120-day note in the amount of $360,000 on November 1, 2016 with an annual rate of 6%. What amount of interest has accrued as of December 31, 2016

Answer 1

Answer:

The amount of interest accrued as of December 31, 2016 is $10,980.

Explanation:

On December 31, two months interest is accrued and this is equivalent to 61 days (30 days for November and 31 days for December).

Calculation of Interest accrued is as follows ;

Interest accrued =  $360,000 × 6% × 61/120

                           =   $10,980