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Hi
Please help with the below.
A company had $10,000 of loan notes in issue at 31 December 20X6. On 30 April 20X7, the company repaid $2,000 of the loan notes. The loan notes carry interest at the rate of 8% per annum.
What amount should appear in the statement of profit or loss and other comprehensive income for the year ended 31 December 20X7 for interest payable?
My calculations: 10,000-2000=8000
0.08*8000=640but the answer is 693. Can you please help me understand what I have missed.
Cheers
Hi Mike, thanks for quick reply. Where did the 4/12 come from? and where did the 8/12 come from? why did you do that? whats the logic/theory behind that?
thanks
January, February, March and April is four months out of the twelve in a full year. The 10,000 loan notes were in issue until the end of April at which date 2,000 were paid back so then for the remaining eight months out of a full twelve there were only 8,000 loan notes in issue
That leaves us with 10,000 for 4 / 12 of a year @ 8% nad
8,000 for 8 / 12 of a year @ 8%Better?
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