On November 1, 2021, a company signed a $100,000, 6%, six-month note payable with the amount borrowed plus accrued interest due six months later on May 1, 2022. The company should report interest payable at December 31, 2021, in the amount of:

The correct answer to the following question is $1000.

Explanation:

Given information -

Note payable amounted to $100,000 with 6% interest rate

Duration of note payable = 6 months

For calculating the interest payable on December 31, 2021 -

Amount of note payable x interest rate x number of months

Note - here we have to take out interest for 2 months, so the calculation would be -

$100,000 x 6% x 2/12

= $6000 / 6

= $1000

Therefore the amount of interest payable on December, 2021 is $1000