Question

On October​ 1, 2018, Equipment Suppliers Company made a loan to one of its customers. The customer signed a​ 4-month note for​ $110,000 at​ 13%. How much interest revenue did the company record in the year​ 2018? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

$3,575

Step-by-step explanation:

The computation of the interest revenue recorded in the year 2018 is shown below:

= Principal × rate of interest × number of months ÷ (total number of months in a year)

= $110,000 × 13% × (3 months ÷ 12 months)

= $3,575

The three months is calculated from October 1 , 2018 to December 31, 2018

We assume the books are closed on December 31, 2018