Question

On April 1, 20X1, Nelsen Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20X2 (one year later). On December 31, 20X1, Nelsen will accrue interest revenue of:

Answer 1

Based on the amount received as a notes receivable, and the month the interest revenue is recorded, the amount accrued would be $2,000.

What interest revenue will be accured?

From December 20X1 to March 20X2 will be 3 months.

The interest revenue will therefore be:

= Amount of note receivable x Interest rate x Number of months till interest is due

= 100,000 x 8% x 3/12 months

= $2,000

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