Accounting help with calculating interest expense on a note?

Question

On Sept. 1, 2005, "A" purchased a building from "B" by paying $100,000 cash and issuing a one-year note payable for the balance of the purchase price. Interest on the note is stated at an annual rate of 9% and is paid at maturity. In its Dec. 31, 2005, balance sheet, "A" correctly presented the note and interest payable as follows:

Interest Payable: $15,000

Notes Payable, 9% due Sept. 1, 2006 $500,000

What is the amount of the interest expense "A" will recognize on this note in 2006?

What is the total cash paid for the building purchased by "A"?

How much must "A" pay "B" on Sept. 1, 2006, when the note matures?

Answer 1

If your note payable is for $500,000 and the issue date is Sept 1, 2005, then on Dec 31, 2005, you have to accrue 4 mths of interest, so 9% x 500,000 x 4/12 = $15,000.

What is the amount of the interest expense "A" will recognize on this note in 2006?

In 2006, you should recognise the remaining 8 mths of interest, so 9% x 500,000 x 8/12 = $30,000

What is the total cash paid for the building purchased by "A"?

This question is not well worded, but I guess they want you to answer $645,000 (cost of bldg $600,000 + interest cost $45,000)

How much must "A" pay "B" on Sept. 1, 2006, when the note matures?

$545,000

Answer 2

1. I thank yu sae interest Sep-Des was 15,000$...thats 4 months=1/3 yeer.  So 1 yeer=3*15,000=45,000$.

Did yu pae the 15,000$ interest at end av 2005?

Du interest kompound if yu dont pae it?

Du yu pae NE-thang on the $ yu borroed?

2. 9% & 1 yeer interest=45,000$ impli lone is 500,000$

Yu gotta pae 500,000$ plus interest tu date.  Wenever yu pae it off.  Unless interest kompound.