Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2013. The note is due on March 31, 2014. Assuming the company's accounting period ends on December 31, 2013, how much interest revenue should be recognized during 2013 and 2014? 2013 2014

Question

Quizplus · Accepted Answer

To calculate the interest revenue for 2013, we need to determine the period from July 1, 2013, to December 31, 2013, which is 6 months. Therefore, the interest revenue earned in 2013 is:
$100,000 x 9% x 6/12 = $4,500

To calculate the interest revenue for 2014, we need to determine the period from January 1, 2014, to March 31, 2014, which is 3 months. Therefore, the interest revenue earned in 2014 is:
$100,000 x 9% x 3/12 = $2,250

Therefore, the total interest revenue recognized in 2013 and 2014 is $4,500 + $2,250 = $6,750, which is represented by choice B.

Carnegie Jewelers Accepted a 9-Month, 9% Note for $100,000 from a Customer