On October 1, Black Company receives a 10% interest-bearing note from Reese Company to settle a...

On October 1, Black Company receives a 10% interest-bearing note from Reese Company to settle a $22,600 account receivable. The note is due in six months. At December 31, Black should record interest revenue of

a.$572

b.$565

c.$575

d.$562

Please answer it asap

Expert Solution

Solution:
	CALCULATION OF TOTAL INTEREST RVENUE RECOGNISED AS ON DECEMBER 31
		Interest Revenue At December 31	Interest Revenue Maturity	Total Interest Revenue
	Principal value of note Receivable	$ 22,600	$ 22,600	$ 22,600
	Rate %	10%	10%	10%
	Time (In Months)	3	3	6
	Total Interest	$ 565	$ 565	$ 1,130

	Interest revenue recongnized upto december 31 is for 3 months only (October , November & December)

	As per above calculation interest revenue is $ 565 on note receivable upto December 31

	Answer = Option B = $ 565

ekkarill92 answered 2 years ago

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