Assume the Fallon Sales company completed the following note-payable transaction
ID: 2444919 • Letter: A
Question
Assume the Fallon Sales company completed the following note-payable transactions:
2014
April 1 Purchased delivery truck costing 58,000 by issuing a one-yeaar, 4% note payable.
Dec 31 Accrued interest on the note payable.
2015
April 1 Paid the note payable at maturity.
Requirements:
1. How much interest expense must be accrued at December 31, 2014? (Round your answer to the nearest whole dollar)
2. Determine the amount of Fallon Sales' final payment on April 1, 2015.
3. How much interest expense will Fallon Sales report for 2014 and for 2015? (Round your answer to the nearest whole dollar)
Explanation / Answer
1. Interest expense accrued on dec 31= 58000*4%*9/12=$1740
2. Final payment of interest expense on April 1 2015= 58000*4%=$2320
3. Interest expense for 2014= $1740
for 2015= $580