On January 1, 2013, Thames Company Purchases Property and Signs

question 120

Multiple Choice

On January 1, 2013, Thames Company purchases property and signs a 6-year mortgage note for $60,000 at 4%. Please see the partial amortization schedule below. For the year 2013, what will be the total interest expense recorded by Thames Company for this mortgage?

• A)$200.00
• B)$9,533.52
• C)$11,760.00
• D)$2,226.48

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Definitions:

Permanent/Temporary

Permanent/temporary classification refers to the duration for which assets, liabilities, or policies are intended to last, with permanent being indefinite and temporary for a limited period.

Normal Balance

The expected debit or credit balance a particular account should hold under double-entry bookkeeping.

Financial Statement

A written record that conveys the business activities and financial performance of a company, including balance sheets and income statements.

Permanent/Temporary

Classification of accounts where permanent accounts refer to items on the balance sheet and temporary accounts to items that pertain to the income statement.