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7 November, 04:40

On October 1, 2019, Fashion Jewelers accepted a 5-month, 11% note for $7,500 in settlement of an overdue account receivable. The accounting period ends on December 31. Calculate the accrued interest on the note at December 31, 2019. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

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  1. 7 November, 04:54
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    The accrued interest on the note at December 31, 2019 is $206.25

    Explanation:

    Fashion Jewelers accepted a 5-month, 11% note for $7,500.

    The amount of interest for 1 year = 11% x $7,500 = $825

    The amount of interest for 1 month = $825/12 = $68.75

    From October 1, 2019 to December 31, 2019, Fashion Jewelers has accepted the note for 3 months.

    The accrued interest on the note at December 31, 2019 = $68.75 x 3 = $206.25
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