connect.htm @m D Free Screening. Whe p arn Help Save&Exit; Required information

Question

connect.htm @m D Free Screening. Whe p arn Help Save&Exit; Required information The following information applies to the questions displayed below.] On September 1, 2018, Able Company purchased a building from Regal Corporation by paying $440,000 cash and issuing a one-year note payable for the balance of the purchase price. Interest on the note is stated at an annual rate of 9% and is paid at maturity In its December 31. 2018, balance sheet Able correctly presented the note and interest payable as follows Interest payable Notes payable, 9%, due September 1, 2019 13,85e $435,8e0 How much must Able pay Regar Corporation on September 1.2019, when the note matures? Multiple Choice

Explanation / Answer

Principal amount of bonds payable = $435000 Interest rate per annum = 9% Number of months between september and december = 4 months Interest payable for 4 months = $13050 Interest for Jan to Aug = $435000*9%*8/12 = $26100 Total payable amount on maturity = $435000+$13050+$26100 = $474150

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