Question

Abardeen Corporation borrowed $52,000 from the bank on October 1, 2018. The note had an 8 percent annual rate of interest and matured on March 31, 2019. Interest and principal were paid in cash on the maturity date.

Required

A. What amount of cash did Abardeen pay for interest in 2018?

B. What amount of interest expense was recognized on the 2018 income statement?

C. What amount of total liabilities was reported on the December 31, 2018, balance sheet?

D. What total amount of cash was paid to the bank on March 31, 2019, for principal and interest?

E. What amount of interest expense was reported on the 2019 income statement?

(For all requirements, Do not round intermediate calculations and round your final answer to nearest whole dollar amount.)

Interest Expense Paid	ANSWER ?
Interest Expense	ANSWER ?
Total Liabilities	ANSWER ?
Amount of Cash	ANSWER ?
Interest Expense	ANSWER ?

Answer 1

	Answers	Explanation/Working
Interest Expense Paid in 2018	$0	because Interest will be apid on maturity which is in 2019
Interest Expense for 2018	$1,040	3 month interest expense = $52000 x 8% x 3/12
Total Liabilities on 31 Dec 2018	$53,040	[$52000 + $ 1040 of Interest Payable]
Amount of Cash	$54,080	[$52000 + 6 months interest of 2080. (52000 x 8% x 6/12)]
Interest Expense for 2019	$1,040	3 month interest expense (Jan Feb & Mar = $52000 x 8% x 3/12