Abbot Safe & Lock
The following information was obtained from the company's records for Year 1:
$\begin{array}{lr}
\text { Credit sales during the year } & \$ 3,200,000 \
\text { Accounts receivable-December 31, Year 1 } & 325,000 \
\text { Allowance for doubtful accounts-December 31, Year 1 } & 35,000 \
\text { Bad debt expense for the year } & 20,000
\end{array}$

-Refer to the figure A Better Mousetrap.What amount should the company recognize as interest revenue on the maturity date of the note?

Question

Abbot Safe & Lock
The following information was obtained from the company's records for Year 1:
$\begin{array}{lr}
\text { Credit sales during the year } & \$ 3,200,000 \
\text { Accounts receivable-December 31, Year 1 } & 325,000 \
\text { Allowance for doubtful accounts-December 31, Year 1 } & 35,000 \
\text { Bad debt expense for the year } & 20,000
\end{array}$
 
-Refer to the figure A Better Mousetrap.What amount should the company recognize as interest revenue on the maturity date of the note?

Quizplus · Accepted Answer

Interest revenue is recognized on the maturity date of the note. The amount of interest revenue is calculated as the face amount of the note multiplied by the interest rate multiplied by the number of days the note is outstanding, divided by 360 days. In this case, the face amount of the note is $100,000, the interest rate is 9%, and the number of days the note is outstanding is 90 days. Therefore, the amount of interest revenue is $100,000 * 0.09 * 90 / 360 = $2,250.

Abbot Safe & Lock the Following Information Was Obtained from the Company's

Abbot Safe & Lock
the Following Information Was Obtained from the Company's