On June 1, Davis Inc. issued an $84,000, 5%, 120-day note payable to Garcia Company. Assume that the fiscal year of Garcia ends June 30. Using a 360-day year, what is the amount of interest revenue recognized by Garcia in the following year? When required, round your answer to the nearest dollar.
A) $700
B) $1,600
C) $1,062
D) $4,200

Question

Quizplus · Accepted Answer

Amount of revenue recognized = [($84,000 × 5% × 120 ÷ 360) × (120 - 29) / 120] = $1,062