On September 1, 2018, Davis Co. issued a note payable to National Bank in the amount of $2,100,000, bearing interest at 10%, and payable in three equal annual principal payments of $700,000.
On September 1, 2018, Davis Co. issued a note payable to National Bank in the amount of $2,100,000, bearing
interest at 10%, and payable in three equal annual principal payments of $700,000. On this date, the bank’s prime rate was 11%. The first payment for interest and principal is scheduled for September 1, 2019. At December 31, 2018, Davis should record accrued interest payable of
a. $58,000.
b. $54,000.
c. $64,000.
d. $70,000
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