Question 5

Phipps Company borrowed $25,000 cash on October 1, 2016, and signed a nine-month, 8% interest-bearing note payable. Interest is to be paid at maturity. Assume that no adjusting entries have been made for accrued interest during the year. What amount of accrued interest payable should be reported on the December 31, 2016 balance sheet?

$250

$300

$500

$750