On November 1,Jasper Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The amount of interest revenue that should be reported in the first year is:
A)$0.
B)$6,000.
C)$5,000.
D)$16,667.
E)$1,000.

Question

Quizplus · Accepted Answer

The interest revenue for the first year is calculated for the period from November 1 to December 31, which is 2 months. The interest for 2 months is ($100,000 * 6% * 2/12) = $1,000.

On November 1,Jasper Company Loaned Another Company $100,000 at a 6.0