[The Following Information Applies to the Questions Displayed Below

question 102

Multiple Choice

[The following information applies to the questions displayed below.]
Omega Company adjusts its accounts at the end of each month.The following information has been assembled in order to prepare the required adjusting entries at December 31:
(1) A one-year bank loan of $720,000 at an annual interest rate of 12% had been obtained on December 1.
(2) The company pays all employees up-to-date each Friday.Since December 31 fell on Tuesday,there was a liability to employees at December 31 for two day's pay amounting to $6,800.
(3) On December 1,rent on the office building had been paid for four months.The monthly rent is $6,000.
(4) Depreciation of office equipment is based on an estimated useful life of six years.The balance in the Office Equipment account is $9,360;no change has occurred in the account during the year.
(5) Fees of $9,800 were earned during the month for clients who had paid in advance.
-What amount of interest expense has accrued on the bank loan?

• A)$6,400
• B)$7,000
• C)$7,200
• D)$7,800

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Definitions:

Technical Expertise

The specialized knowledge or skills in a particular field or area of study.

Cross-Functional Project Teams

Teams composed of members with different expertise and from various departments, collaborating towards a common goal.

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The process of creating, developing, and communicating new concepts or approaches, often as part of problem-solving or innovation.

Idea Evaluation

The systematic analysis of the potential, feasibility, and marketability of a new idea to determine its viability as a business opportunity.