Frankenstein Enterprises Received Two Notes from Customers for Sales That

Frankenstein Enterprises received two notes from customers for sales that it made to them in 2009. The notes included: Note A: Dated 5/31/09, principal of $120,000 and interest due 3/31/10.
Note B: Dated 7/1/09, principal of $200,000 and interest at 8% annually, due on 4/1/10.
Frankenstein had accrued interest receivable from these notes of $14,400 on its 12/31/09 balance sheet. What amount of interest revenue would Frankenstein earn on these notes during 2010?

A) Above $12,000.
B) Between $7,000 and 10,000.
C) Less than $5000.
D) None of these is correct.Note A earns 9.14% annually.During 2010, Note A is held for 3 months, so it earns $120,000 .0914 3/12 = $2,742.Note B also is held for 3 months and earns 8% annually, so $200,000 .08 4/12 = $4,000.So the total interest revenue earned in 2010 is $6,742.Note: This question requires the use of the interest rate answer solved in question 103.