On June 1, 2014, Siebens Enterprises loaned $20,000 to Tyler Company for one year at 8 percent interest. Under the terms of the promissory note, Tyler will repay the principal and pay one year's interest on May 31, 2015.
Related to this note receivable, what amount of interest income would Siebens report on its 2015 income statement?
A) $667
B) $600
C) $800
D) $0

Question

Quizplus · Accepted Answer

The interest income for one year is $20,000 x 8% = $1,600. Since the note was for one year and the interest is paid at the end of the year, Siebens would report $1,600 of interest income on its 2015 income statement.

On June 1, 2014, Siebens Enterprises Loaned $20,000 to Tyler