Utah Co.sold merchandise to Big Sky Corp.on December 1,2017,for $9,000 and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31.What amount should Utah recognize as interest revenue on December 31,2017 (if a 360-day year is assumed)?

Question

Quizplus · Accepted Answer

Interest revenue is calculated using the formula: Principal amount x Interest rate x Time (in terms of year). For the period from December 1 to December 31 (31 days), the interest revenue is: $9,000 x 8% x (31/360) = $60.

Utah CoSold Merchandise to Big Sky Corp