Question

Rosewood Company made a loan of $12,600 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be:

Answer 1

The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be: $567; $189.

Interest revenue for December 31, Year 1 from April - December

Interest revenue=($12,600 × 6% × 9/12 months)

Interest revenue=$567

Interest revenue for December 31, Year 2 from January - March

Interest revenue=($12,600 × 6% × 3/12 months)

Interest revenue=$189

Inconclusion the amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be: $567; $189.

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