How to accrue interest expense
Harper Company borrowed money by issuing a $10,000 face value discount note to its bank. The note had an 8% interest rate and had a term of 1 year. On December 31, 2011, Harper should accrue interest expense in the amount of $200.
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Ware Company borrowed $10,000 on September 1, 2011 from the National Bank. Ware agreed to pay interest annually at the rate of 6% per year.
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