An employee of Company x received the following loans (rate and amount) from their employer on January 1, this year: 7%, $15,000 loan to consolidate debts 5%, $100,000 loan to purchase a home The following are the prescribed rates for this year: Q1 8%, Q2 6%, Q3 9%, Q4 7% The employee paid interest on the loans on January 15, of the following year. Required: Calculate the total interest benefit (to be included in income). Ignore any leap year impacts. A Total interest as per the prescribed rates $8,37 B Total interest as per the prescribed rates $8,62 CTotal interest as per the prescribed rates $8,37 $6,050; total interest benefit $2,325 DTotal interest as per the prescribed rates $8,62 $6,050; total interest benefit $2,577 ***ANSWERD Total interest as per the prescribed rates $8,627; total interest paid $6,050; total interest benefit $2,577 IS INCORRECT***

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An employee of Company x received the
following loans (rate and amount) from their
employer on January 1, this year:
7%, $15,000 loan to consolidate debts
5%, $100,000 loan to purchase a home
The following are the prescribed rates for this
year:
Q1 8%, Q2 6%, Q3 9%, Q4 7%
The employee paid interest on the loans on
January 15, of the following year.
Required: Calculate the total interest benefit
(to be included in income). Ignore any leap
year impacts.
ATotal interest as per the prescribed rates $8,375
B Total interest as per the prescribed rates $8,627
CTotal interest as per the prescribed rates $8,375
$6,050; total interest benefit $2,325
DTotal interest as per the prescribed rates $8,627
$6,050; total interest benefit $2,577
***ANSWERD Total interest as per the
prescribed rates $8,627; total interest paid
$6,050; total interest benefit $2,577 IS
INCORRECT***
Transcribed Image Text:An employee of Company x received the following loans (rate and amount) from their employer on January 1, this year: 7%, $15,000 loan to consolidate debts 5%, $100,000 loan to purchase a home The following are the prescribed rates for this year: Q1 8%, Q2 6%, Q3 9%, Q4 7% The employee paid interest on the loans on January 15, of the following year. Required: Calculate the total interest benefit (to be included in income). Ignore any leap year impacts. ATotal interest as per the prescribed rates $8,375 B Total interest as per the prescribed rates $8,627 CTotal interest as per the prescribed rates $8,375 $6,050; total interest benefit $2,325 DTotal interest as per the prescribed rates $8,627 $6,050; total interest benefit $2,577 ***ANSWERD Total interest as per the prescribed rates $8,627; total interest paid $6,050; total interest benefit $2,577 IS INCORRECT***
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