The statement of profit or loss shows interest revenue for the year of $12 000 and the balance sheet show interest receivable at the beginning of the year of $5 000 and at the end of the year of $8 000. The amount of interest received in cash for the year is:

Question

Quizplus · Accepted Answer

Interest revenue for the year is $12 000. 
Interest receivable at the beginning of the year is $5 000, and at the end of the year is $8 000. 
To determine the amount of interest received in cash for the year, we need to calculate: 
Interest received in cash = Interest revenue - Increase in interest receivable 
Increase in interest receivable = Ending balance - Beginning balance 
Increase in interest receivable = $8 000 - $5 000 = $3 000

Therefore, 
Interest received in cash = $12 000 - $3 000 = $9 000

The correct answer is C.

The Statement of Profit or Loss Shows Interest Revenue for the Year