Given the Following Information from an Amortization Table, Compute the Interest

question 130

Multiple Choice

Given the following information from an amortization table, compute the interest expense and the carrying value for the next line of the table, rounding your answer to the nearest dollar: $$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } 2 \% \text { Cash } \\\text { Interest }\end{array} & \begin{array} { c } 1 \% \text { Effective } \\\text { Interest }\end{array} & \begin{array} { c } \text { Premium } \\\text { Amortization }\end{array} & \begin{array} { c } \text { Carrying } \\\text { Value }\end{array} \\\hline \$ 800 & \$ 412 & \$ 388 & \$ 40,812 \\\hline\end{array}$$

• A) Interest Expense $408; Carrying Value $40,420
• B) Interest Expense $408; Carrying Value $41,220
• C) Interest Expense $412; Carrying Value $40,420
• D) Interest Expense $412; Carrying Value $41,220

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Definitions:

Hourly Wages

A rate an employer agrees to pay a worker for each hour worked.

Commission

A fee or percentage awarded to an individual or group for performing a service or facilitating a transaction.

Required Deduction

A mandatory subtraction from gross income, such as taxes or social security contributions, which lowers taxable income.

Unemployment Tax

A tax imposed by governments on employers based on the wages paid to employees, used to fund unemployment compensation programs.