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30 January, 23:03

On April 1, 2021, a company loans one of its suppliers $50,000 and accepts a 24-month, 12% note receivable. Calculate the amount of interest revenue the company will recognize in 2021, 2022, and 2023

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  1. 31 January, 00:59
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    2021, $4,500: 2022, $ 6,000; and 2023 $1500

    Explanation:

    In 2021, the company will recognize an interest for nine months.

    Using the simple interest formula, the firm will recognize

    Interest = p x r x t

    i=$50,000 x 12/100 x 9/12

    =50,000 x0.12 x 0.75

    =$4,500.

    In 2022, the company should recognize an interest for 12 months / one year

    =$50,000 x 12/100 x1

    =50,000 x 0.12 x 1

    =$6,000

    In 2023, the company should recognize an interest for (24 - (12+9) months

    =$50,000 x 0.12 x 3/12

    =$6000 x 0.25

    =$1500
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