Accent Flooring
The company received a promissory note from a customer on March 1, 2019. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest.
-Refer to the information for Accent Flooring. What is the total amount of interest the company will receive when the note is collected?

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of interest.

Interest = Principal x Rate x Time

Where: 
Principal = $20,000
Rate = 9% annual interest / 4 quarters in 3 months = 2.25% per quarter
Time = 3 months

Interest = $20,000 x 2.25% x 3 = $1,350

Therefore, the total amount of interest the company will receive when the note is collected is $1,350.

The best choice is C.

Accent Flooring the Company Received a Promissory Note from a Customer on Customer