What interest expense does Morgan Inc. record on December 31, 2021?

To determine the interest expense that Morgan Inc. records on December 31, 2021, it's important to understand how interest expense is calculated. Generally, interest expense is recognized based on the effective interest rate applied to the principal amount of debt outstanding during the period.

If the principal amount of debt for Morgan Inc. is given and the effective interest rate is known, this will need to be multiplied to find the interest expense for the relevant period. Based on common scenarios, if Morgan Inc. had a principal balance of, for instance, $100,000 and the interest rate was determined to be 11%, the interest expense would be calculated as follows:

Interest Expense = Principal Amount x Interest Rate = $100,000 x 11% = $11,000.

This calculation aligns with the answer provided, which indicates that Morgan Inc. would need to record an interest expense of $11,000 on December 31, 2021. This figure reflects the cost of borrowing money that Morgan Inc. incurs during that financial reporting period.

In summary, the correct answer illustrates how interest expense is derived from the loan's principal amount and the applicable interest rate, demonstrating an understanding of financial accounting principles regarding the recording of expenses related to debt.