A Better Mousetrap The company sold merchandise to a customer on December 1,2012,for $100,000.The customer paid with a promissory note that has a term of 6 months and an annual interest rate of 9%.The company's accounting period ends on December 31.
-Refer to A Better Mousetrap.What amount should the company recognize as interest revenue on the maturity date of the note?

Question

Quizplus · Accepted Answer

The company's accounting period ends on December 31, so only one month will have passed since the sale when the period ends. Therefore, the interest revenue can be calculated as:

($100,000 x 9% x 1/12) = $750

This means that the company should recognize $750 as interest revenue on the maturity date of the note. Therefore, the best choice is C.

A Better Mousetrap the Company Sold Merchandise to a Customer