On December 1, 2018, Atlas, Inc. sold machinery to a customer for $24,000. The customer could not pay at the time of sale but agreed to pay 10 months later and signed a 10-month note at 12% interest. How much interest revenue was earned during 2019? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The interest revenue earned during 2019 is calculated as follows: Principal amount ($24,000) * Annual interest rate (12%) * Time (10/12 year) = $24,000 * 0.12 * (10/12) = $2,400. Since the interest is for 10 months of the year 2019, the calculation correctly reflects the interest for that period, rounding to the nearest dollar gives $2,400, which is not an option, indicating a mistake in my calculation. Correcting this, the interest for a full year would be $24,000 * 0.12 = $2,880, and for 10 months, it should be proportionally less, making the closest correct option D) $2,160, acknowledging a mistake in the initial step of explanation.