Interest question accounting?
Four Oaks Golf Inc. was organized on July 1, 2012. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on September 30 are shown here.
FOUR OAKS GOLF INC.
September 30, 2012
Notes Payable $5,000
Interest Expense $50
Interest Payable $50
If the note bears interest at 12%, how many months has it been outstanding?
yea for some reason i thought it was 12% per month and i did
50/5000 = 1%, x12 = 12 months, lol
50 / 5,000 = 1%
Since the interest rate is 12% per year and 1% is 1/12 of 12%, the note has been outstanding for one month.