Compute the correct amount of interest expense

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Problem - You are reviewing the notes payable and interest expense accounts of Cole Manufacturing Co. as of December 31, 2017 and noted that the company regularly borrows from the bank in order to ?nance working capital. The following schedule shows loans with 12% interest rate, with interest payable at maturity. All loans are repaid at its scheduled maturity date and interest expense is recorded when the loans are repaid.

DATE OF LOAN

AMOUNT

MATURITY DATE

TERM OF LOAN

Nov. 01, 2016

P500,000

Oct. 31, 2017

1 year

Feb. 01, 2017

1,500,000

July 31, 2017

6 months

May 01, 2017

800,000

Jan. 31, 2018

9 months

The client recorded interest expense of P 150,000 for 2017. Compute for the correct amount of interest expense that should be reported in the 2017 income statement.

Reference no: EM132866182

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