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On november 1, 2012 New Morning Bakery signed a $200000, 6%, six month note payable with the amount borrowed plus accrued interest due in six months later on May 1, 2013. New Morning Bakery records the appropriate adjusting entry for the note on December 31, 2012. What amount of cash will be needed to pay back the note payable plus any accrued interest on May 1, 2013?

Respuesta :

Answer:

$200,600

Explanation:

The total amount which is paid back with the accrued interest is shown below:

= Note payable + Accrued interest

where,

Note payable is $200,000

And, the accrued interest equals to

= Principal × rate of interest × number of months ÷ (total number of months in a year)

= $200,000 × 6% × (6 months ÷ 12 months)

= $600

The 6 months is calculated from November 1,2012 to May 1, 2013

Now put these values to the above formula  

So, the value would equal to

= $200,000 + $600

= $200,600

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