Question text

Baker Corp.'s liability account balances at June 30, 20x2 included a 10 percent note payable in the amount of $1,000,000. The note is dated October 1, 20x0 and interest is payable each October 1. The first interest payment was made on October 1, 20x1. In Baker's June 30, 20x2 balance sheet, what amount should be reported as accrued interest payable for this note?

Select one:

a. $37,500

b. $75,000

c. $112,500

d. $66,667