On 1 January, Ajax Company accepted a one- year bill for $5 000 at 4% from one of its customers. When the bill matured on 31 December, the customer was unable to pay, and Ajax treated it as a dishonoured bill. How much interest revenue did Ajax record at 31 December?

Question

Quizplus · Accepted Answer

The interest revenue is calculated as the principal amount ($5,000) multiplied by the interest rate (4%) for one year, which equals $200.

On 1 January, Ajax Company Accepted a One- Year Bill