Andrews Corporation's Liability Account Balances at June 30, 2013, Included

question 4

Multiple Choice

Andrews Corporation's liability account balances at June 30, 2013, included a 10 percent note payable.The note is dated October 1, 2011, and carried an original principal amount of $600,000.The note is payable in three equal annual payments of $200,000 plus interest.The first interest and principal payment was made on October 1, 2012.In Andrews' June 30, 2013, balance sheet, what amount should be reported as Interest Payable for this note?

• A)$10,000
• B)$15,000
• C)$30,000
• D)$45,000
• E)None of these answers is correct.

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Definitions:

Direct Labor Costs

Expenses that can be directly traced to the production of specific goods or services, including wages and benefits of workers involved in production.

Raw Materials

Basic substances in their natural, modified, or semi-processed states used as inputs for production.

Standard Cost System

An accounting method that uses cost standards for material, labor, and overhead charges to control costs and assess operational efficiency.

Direct Labor Standards

Direct Labor Standards define the expected labor time and cost necessary to produce a unit of product, facilitating budgeting and performance evaluation.