On December 11, Allen gave a $10,000, 60-day, 9% note to Crane in payment of an account. On December 31, Crane should record

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Quizplus · Accepted Answer

To calculate the interest income for Crane, use the formula: Interest = Principal × Rate × Time. Here, Principal = $10,000, Rate = 9% (or 0.09), and Time = 20 days (from December 11 to December 31) out of 360 days (assuming a 360-day year for simplicity). Thus, Interest = $10,000 × 0.09 × (20/360) = $50. This is interest income for Crane, not an expense.

On December 11, Allen Gave a $10,000, 60-Day, 9% Note