While preparing 2020 financial statements, a company learned that in 2019 an inexperienced accountant had incorrectly accrued interest on a $10,000 note payable at a rate of 10% rather than the correct rate of 9%. In 2020, Interest was correctly recorded at a rate of 9%. The note was issued on January 1, 2019. The company pays taxes at a rate of 25%. Interest expense in the 2020 income statement should be:

Multiple Choice

• $900

• $800

• $675

• $600