On 1 October 2016,Android Ltd made a loan to one of its customers.The customer signed a 4-month note for $100,000 at 13%.How much interest revenue did the company record in the year 2016?

Question

Quizplus · Accepted Answer

The interest revenue for the loan can be calculated using the formula:

Interest = Principal x Rate x Time

Where, 
Principal = $100,000 
Rate = 13% per annum 
Time = 3/12 years (since the loan was made on 1 October and the year ends on 31 December)

Substituting the values:

Interest = $100,000 x 13/100 x 3/12 
= $3,250

Therefore, the interest revenue recorded in the year 2016 was $3,250. 
Hence, the best choice is C.

On 1 October 2016,Android Ltd Made a Loan to One