Question

On September 1, 2021, Middleton Corp. lends cash and accepts a $3,900 note receivable that offers 9% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021? (Do n

Answer 1

Answer:

$117

Explanation:

The computation of the interest revenue is shown below:

= Note receivable amount × rate of interest × number of months ÷ (total number of months in a year)  

= $3,900 × 9% × (4 months ÷ 12 months)

= $117

The 4 months are from 1 September 2021 to 31 December 2021 It is assumed that the books will be closed on 31 December 2021