Carlock Systems received a 6-month, 12% note for $50,000 from a customer on November 1, 2019. The note is due on April 30, 2020. Assuming the company's accounting period ends on December 31, how much interest revenue should be recognized during 2019 and 2020?
2019 2020

Question

Carlock Systems received a 6-month, 12% note for $50,000 from a customer on November 1, 2019. The note is due on April 30, 2020. Assuming the company's accounting period ends on December 31, how much interest revenue should be recognized during 2019 and 2020? ​
2019 2020

Quizplus · Accepted Answer

Interest for 2019 is calculated for 2 months (November and December) at 12% annual rate: $50,000 * 12% * (2/12) = $1,000. Interest for 2020 is for 4 months (January to April): $50,000 * 12% * (4/12) = $2,000.

Carlock Systems Received a 6-Month, 12% Note for $50,000 from a Customer