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In: Accounting

On April 1, 2021, Giant Bakery (fiscal year: January-December) sold goods on credit & received a...

On April 1, 2021, Giant Bakery (fiscal year: January-December) sold goods on credit & received a 6% interest-bearing note receivable of $20,000 from the customer. Principal and interest due March 31, 2022.

How much should Giant Bakery report interest revenue from the notes? When should Giant Bakery report interest revenue from the notes? Justify with FASB.

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Expert Solution

SOLUTION:
Notes:
Value of Note Receivable $                   20,000
Rate of interest 6%
Interest for one year = $ 20,000 X 6 % = $                     1,200
Caclulation of Interest upto December 31, 2021
Interest Revenue = $ 1,200 X 9 Months / 12 Months = $                         900
Answer =
Interest Revenue will be shown as on December 31 income statement $                         900
This will also repoted as interest receivable in financial statement - Balance Sheet $                         900

ekkarill92 answered 1 year ago
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