On july 8, jones inc. issued an $80,000, 6%, 120-day note payable to miller company. assume that the fiscal year of jones ends july 31. using the 360-day year, what is the amount of interest expense recognized by jones in the current fiscal year?

The amount of interest is calculated using:

Interest = Capital * interest rate

The interest rate of 6% is for one year (360 days). Calculating for the interest rate for the period July8 to July 31:

interest rate = ((31-8) / 360) * 0.06

interest rate = 0.003833

Therefore:

Interest = $80,000 * 0.003833

Interest = $306.67