Final answer:
The accrued interest on the payee's December 31 balance sheet for a $8,000, 9%, 9-month note receivable issued on May 1 is $450.
Step-by-step explanation:
The accrued interest on a note receivable can be calculated using the simple interest formula: Interest = (Principal x Rate x Time) / 12. In this case, the principal is $8,000, the rate is 9%, and the time is 9 months. Converting the time to years by dividing by 12, we have 9/12 = 0.75 years. Plugging these values into the formula, we get:
Interest = (8,000 x 0.09 x 0.75) / 12 = $450
Therefore, $450 of accrued interest should be reported on the payee's December 31 balance sheet.