Question

Your audit client, The Brant Group, reported total interest expense for the year of $ 2,000. The table below provides the monthly balance of their long- term debt. Interest is paid monthly on the average daily balance during the month. The annual interest rate for the debt is 6%.
Balance of long- term debt @ Jan 31 ..... 100,000
Balance of long- term debt @ Feb 28 ..... 90,000
Balance of long- term debt @ Mar 31 ..... 80,000
Balance of long- term debt @ Apr 30 ..... 70,000
Balance of long- term debt @ May 31 ..... 90,000
Balance of long- term debt @ June 30 ..... 85,000
Balance of long- term debt @ July 31 ..... 80,000
Balance of long- term debt @ Aug 31 ..... 70,000
Balance of long- term debt @ Sept 30 ..... 60,000
Balance of long- term debt @ Oct 31 ..... 65,000
Balance of long- term debt @ Nov 30 ..... 75,000
Balance of long- term debt @ Dec 31 ..... 50,000

Required:
Based on the data provided, do you consider the reported interest expense fairly stated? Why or why not?



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  • CreatedSeptember 22, 2014
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