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Troop Co. frequently borrows from the bank to maintain sufficient operating cash. The following loans were at a 12% interest rate, with interest payable at maturity. Troop repaid each loan on its scheduled maturity date.
Troop records interest expense when the loans are repaid. Accordingly, interest expense of $3,000 was recorded in Year 2. If no correction is made, by what amount would Year 2 interest expense be understated?
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