On October 1, 2015, Android Inc. made a loan to one of its customers. The customer signed a 4-month note for $100,000 at 15%. How much interest revenue did the company record in the year 2015?

Question

Quizplus · Accepted Answer

The interest revenue for the year 2015 is calculated as follows:

Interest = (Principal x Rate x Time)/12

Where, 
Principal = $100,000 
Rate = 15% 
Time = 3 months (since the loan was made on October 1, 2015)

Interest = ($100,000 x 15% x 3)/12 = $3,750

Therefore, the company recorded $3,750 as interest revenue in the year 2015. The correct answer is D.