On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is
A) $300.
B) $9,000.
C) $9,300.
D) $9,900.

Question

Quizplus · Accepted Answer

The amount of cash that will be received by Platt Company when the note becomes due is the sum of the principal amount ($9,000) and the interest that has accrued over the four-month period.

To calculate the interest accrued, we need to use the formula:

Interest = Principal x Rate x Time

In this case, the principal is $9,000 and the rate is 10%. The time is four months, which is equivalent to 4/12 = 1/3 of a year.

Therefore, the interest accrued is:

Interest = $9,000 x 10% x 1/3 = $300

Adding the interest to the principal, we get:

Cash to be received = $9,000 + $300 = $9,300

Therefore, the best choice is C.

On February 1, Platt Company Received a $9,000, 10%, Four-Month