Problem 2

Braxton Co. borrowed $65,000 from the bank on October 1, 2015. The note had an 4.5 percent annual rate of interest and matured on March 31, 2016. Interest and principal will be paid in cash on the maturity date. Required: a. What amount of cash did Braxton Co. pay for interest in 2015 Amount of cash paid b. What amount of interest expense was reported on the 2015 income statement? Interest expense What is the total liabilities reported on the December 31, 2015, balance sheet? (Consider the note and the interest) c. Total liabilities d. What is the total cash paid to the bank on March 31, 2016 for principal and interest? Amount of cash paid e. What amount of interest expense will be reported on the 2016 income statement? Interest expense