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The interest paid is in respect of a company’s 6% loan notes, with interest for six months of 24600 being paid on 1 january 2022. Interest of 12300 will be accrued at 31 march 2022, with the corresponding accrual at 1 december 2021 being 20500. The loan notes were issued in order to finance the company’s trading activities.
Why is the amount of interest payable 16400. Why has 24600 been added to the 12300 and 20500 deducted.Please do not head up your posts ‘question’. You must head them up with the topic you are asking about. It is because many students use our search box to see if the same question has already been answered previously.
The 6 months referred to are the 6 months July 2021 to December 2021 (interest is always paid in arrears).
As at 1 December 2021 they will have accrued for 5 months interest (5/6 x 24,600 = 20,500).
As at 31 March 2022 they will accrue for for 3 months interest (3/6 x 24,600 = 12,300).The interest expense for the period 1 December 2021 to 31 March 2022 (but the question as you have typed it does not say for what period the expense is required) is 16,400 (4/6 x 24,600)
How could it be assumed that the six months being referred are july 2021 to december 2021 unless they are specified in the question. It could be january 2021 to june 2021.
I asked answer to one of your other posts if you had watched my free lectures, and you have not replied.
You cannot expect me to answer your questions if you are not prepared to watch my lectures – we do not give personal tuition.
I explain what paying in advance and paying in arrears mean in my lectures on accruals and prepayments (which I also suggested you watch, but you obviously have not).
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