Rosewood Company made a loan of $16,000 to one of the company's employees on April 1,2016.The one-year note carried a 6% rate of interest.The amount of interest revenue that Rosewood would report in 2016 and 2017,respectively would be:
2016 2017

Question

Quizplus · Accepted Answer

The interest revenue for 2016 can be calculated as $16,000 x 6% = $960. This is recognized as revenue in the year the loan is made.

For 2017, there will be no additional interest revenue since the loan is only for one year and has now been fully repaid. Therefore, the total interest revenue for the two years is $960 (in 2016) + $0 (in 2017) = $960, which is option D.

Rosewood Company Made a Loan of $16,000 to One of the Company's