Entity O signed a five-month note payable in the amount of $18,000 on November 1 with principal and interest payable at maturity. The note requires interest at an annual rate of 8%. The amount of interest expense Entity O must recognize at December 31 is: $120 $240 $600 $1,400 100

Entity O signed a five-month note payable in the amount of $18,000 on November 1 with principal and interest payable at maturity. The note requires interest at an annual rate of 8%. The amount of interest expense Entity O must recognize at December 31 is: $120 $240 $600 $1,400 100

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 16Q: Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Entity O signed a five-month note payable in the amount of $18,000 on November 1 with
principal and interest payable at maturity. The note requires interest at an annual rate of
8%. The amount of interest expense Entity O must recognize at December 31 is:
$120
$240
$600
$1,400
O O

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