Bargain Basement borrows $400,000 on July 1 with a short-term loan that has an annual interest rate of 6%, payable on the first day of each subsequent quarter. The total principal is due in 1 year.

1. For the year ending on December 31, how much interest expense should Bargain Basement record?
2. What should the total liability associated with the note be, including any accrued interest, on December 31?