Question

QUESTION 10

1. On September 28, Reeve Incorporated purchased equipment with a purchase price of $39,787 plus 5% sales tax. Shipping terms were FOB Shipping Point and shipping charges were $265.  Installation was completed, and the new equipment was placed in service on October 1.  Installation costs totaled $935.  The shipping and installation costs were paid for in cash on September 28.  The equipment purchase price, including sales tax, was paid for by issuing a 120 day 6% Note Payable on October 1.  Based on past experience,the equipment is expected to have a useful life of 7 years, at which time it will have an estimated worth of $4,128.  The equipment will be depreciated using the Straight Line method.

   Assuming a 360-day year for your calculation, what is the Accrued Interest Expense on the Note on October 31?

Answer 1

Answer Page : No Accrued interest Mote on October 3) e pense on uluun On sept 28, Reeve in corporated purchased equipment with a purchase price of $39,787 plus 5% sales tan cost of equipment purchased Sales tax @5 % $39,487 $ 39,787X 5% $ 1989 On actober 1, Amount of note payable = 39787 +1989 $41776 Interest expense payable on October 31 30 $41776x6% X . Interest rate = 67. Oct 1 - 0063) 360 days 30 days $208.88 ñ $209 :: Accoued interest expense on the note on oct 3) $209