Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Pane Co. had the following borrowings on its books at the end of the current yea

ID: 2560252 • Letter: P

Question

Pane Co. had the following borrowings on its books at the end of the current year: •

$100,000, 12 percent interest rate, borrowed five years ago on September 30; interest payable March 31 and September 30. •

$75,000, 10 percent interest rate, borrowed two years ago on July 1; interest paid April 1, July 1, October 1, and January 1. •

$200,000, noninterest-bearing note, borrowed July 1 of current year, due January 2 of next year; proceeds $178,000.

What amount should Pane report as interest payable in its December 31 balance sheet?

Question 14 options:

$4875

$6750

$26875

$41500

$4875

$6750

$26875

$41500

Explanation / Answer

Interest on $100,000 ($100,000 x 12% x 3/12) $3,000
Interest on $75,000 ($75,000 x 10% x 3/12) $1,875
Total interest payable on December 31 $4,875