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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