On November 1, 2019, a firm accepted a 5-month, 10 percent note for $1,200 from a customer with an overdue balance. The accrued interest recorded for this note for the year ended December 31, 2019, is

Question

Quizplus · Accepted Answer

The interest for the entire 5-month period is calculated as $1,200 x 10% x (5/12) = $50. Since the note was accepted on November 1, 2019, and the year ended on December 31, 2019, only 2 months of interest should be considered for 2019. Therefore, the interest for 2 months is $50 x (2/5) = $20.

On November 1, 2019, a Firm Accepted a 5-Month, 10