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    Accrued Interest Payable

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    On September 1, 2006, Olsen Co. issued a note payable to National Bank in the amount of $1,200,000, bearing interest at 12%, and payable in three equal annual principal payments of $400,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2007. On December 31, 2007, Olsen should record accrued interest payable of:


    Please give the calculation.

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    Solution Summary

    The solution contains step-by-step information on how to calculate the amount of accrued interest payable.