Problem
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.
Refer to the information above. What amount of interest expense has accrued on the bank loan?