On October 1,2016,a firm accepted a 4-month,8% note for $12,000 from a customer with an overdue account balance.The accrued interest recorded for this note on December 31,2016,is
A) $960.00.
B) $80.00.
C) $240.00.
D) No accrual is necessary.

Question

Quizplus · Accepted Answer

The calculation for accrued interest on a note is Principal x Rate x Time. In this case, the principal is $12,000, the rate is 8%, and the time period is 3 months (from October 1 to December 31). Therefore, the accrued interest would be $12,000 x 8% x 3/12 = $240.00.

On October 1,2016,a Firm Accepted a 4-Month,8% Note for $12,000