How much interest expense is accrued if a firm borrowed $50,000 for 1 year at 12% interest and the year ends on May 31?

To determine the interest expense accrued, we first need to calculate the total interest that will accumulate over the one-year period based on the principal amount, the interest rate, and the duration of the loan.

In this case, the firm borrowed $50,000 at an interest rate of 12% per year. The total interest for the year can be calculated using the formula:

[ \text{Interest} = \text{Principal} \times \text{Interest Rate} \times \text{Time} ]

Here, the principal is $50,000, the interest rate is 12% (or 0.12), and the time is 1 year.

Calculating the total interest for the year:

[ \text{Interest} = 50,000 \times 0.12 \times 1 = 6,000 ]

However, since the year ends on May 31, we need to account for the duration the loan has actually been outstanding within the year. If the loan was taken out on June 1 and the year ends on May 31, then the full year's worth of interest would not be accrued by the end of this specific accounting period.

Instead, only the interest for