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20 June, 14:21

On October 1, Black Company receives a 9% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of A. $0B. $450C. $900D. $1,800

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  1. 20 June, 15:03
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    Ans. B) $450

    Explanation:

    Hi, the interest rate, for a period of time of one year is:

    interest=$20,000*0.09 = $1,800

    But only 3 years had passed (from October 1 to December 31), therefore, Black can only record an interest revenue of

    Interest (3 months) = $1,800/4 = $450

    Best of luck.
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