On September 1, year 1, Brak Co. borrowed on a
$1,350,000 note payable from Federal Bank. The note bears
interest at 12% and is payable in three equal annual principal
payments of $450,000. On this date, the bank’s prime rate was
11%. The first annual payment for interest and principal was
made on September 1, year 2. At December 31, year 2, what
amount should Brak report as accrued interest payable?