2) On July 1, 2018, Ross-Livermore Industries issued nine-month notes in the amo
ID: 2575344 • Letter: 2
Question
2)
On July 1, 2018, Ross-Livermore Industries issued nine-month notes in the amount of $900 million. Interest is payable at maturity.
Required:
Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Fiscal year ends
Principal (million)
X
Rate
X
Time
=
Interest Expense
December 31, 2018
$900
x
14
%
x
=
million
September 30, 2018
$900
x
12
%
x
=
million
October 31, 2018
$900
x
12
%
x
=
million
January 31, 2019
$900
x
8
%
x
=
million
Fiscal year ends
Principal (million)
X
Rate
X
Time
=
Interest Expense
December 31, 2018
$900
x
14
%
x
=
million
September 30, 2018
$900
x
12
%
x
=
million
October 31, 2018
$900
x
12
%
x
=
million
January 31, 2019
$900
x
8
%
x
=
million
Explanation / Answer
Fiscal year ends Principal (million) Rate Time Interest Expense December 31, 2018 900 14% 6/12 63 September 30, 2018 900 12% 3/12 27 October 31, 2018 900 12% 4/12 36 January 31, 2019 900 8% 7/12 42
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