Question

TRN sold $40,000, of goods and accepted the customer's $40,000 10%, 1-year note payable in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30?a. $0.b. $2,000.c. $4,000.d. $8,000.

Answer 1

b. $2,000

Step-by-step explanation:

The computation of the interest amount is shown below:

= Sale value of goods × rate of interest × (number of months ÷ total number of months in a year)

= $40,000 × 10% × (6 months ÷ 12 months)

= $2,000

The 6 months is calculated from June 30 to December 31.

So, the b option is correct and rest options are wrong.