Problem:
Jane's Donut Co. borrowed $197,000 on January 1, 2013, and signed a two-year note bearing interest at 9%. Interest is payable in full at maturity on January 1, 2015. In connection with this note, Jane's should report interest expense at December 31, 2013, in the amount of:
- $37,588.
- $35,460.
- $17,730.
- $0.
Note: Explain the solution in detail.