On 1 December 2016,Parsons Ltd sold machinery to a customer for $20,000.The customer could not pay at the time of sale but agreed to pay 9 months later and signed a 9-month bill at 9% interest.How much interest revenue was earned for the entire term of the bill?

Question

Quizplus · Accepted Answer

The interest revenue earned for the entire term of the bill can be calculated using the simple interest formula,
Interest = (Principal x Rate x Time)/100
Here, the principal is $20,000, the rate is 9% per annum (for 9 months, it will be 9/12 x 9 = 6.75%), and the time is 9/12 years. Plugging in these values,
Interest = ($20,000 x 6.75 x 9/12)/100 = $1350.
Therefore, the correct answer is A) $1350.

On 1 December 2016,Parsons Ltd Sold Machinery to a Customer