Question

Compute the interest accrued on each of the following notes receivable held by Kirkland, Inc., on December 31: (Round to the nearest dollar.) Date of Principal Interest Rate Maker Note Term November 21 Baker December 13 Charlie December 19 Abel 12% 120 days 90 days 60 days $42,000 32,000 9% 25,000 6% Abel 2$ Baker 2$ Charlie $

Answer 1

The interest accrued on each of Kirkland, Inc.'s notes receivable is calculated using the formula: Interest = Principal × rate × time. After converting the days to a year fraction and applying the respective interest rates, the interest is $1,680 for Baker, $720 for Charlie, and $250 for Abel.

Step-by-step explanation:

To compute the interest accrued on each note receivable, we use the formula Interest = Principal × rate × time. The time should be in years, so for a 120-day term, we divide by 360 (assuming the use of a 360-day year) to get the time in years. Let's calculate the interest for each of Kirkland, Inc.'s notes receivable.

• Baker Note: $42,000 × 12% × (120/360) = $1,680
• Charlie Note: $32,000 × 9% × (90/360) = $720
• Abel Note: $25,000 × 6% × (60/360) = $250

If we round these to the nearest dollar, the interest accrued would be $1,680 for Baker, $720 for Charlie, and $250 for Abel. Please note that the actual days in a year can vary between 360 to 365, depending on the convention used.

Answer 2

To compute the interest accrued on each note receivable, use the formula Interest = Principal × Rate × Time. Calculate the interest for each note using the given information: Note from Baker: $440, Note from Charlie: $252, Note from Abel: $246.

Step-by-step explanation:

To compute the interest accrued on each of the notes receivable held by Kirkland, Inc. on December 31, we need to use the formula: Interest = Principal × Rate × Time. We have three notes with different principal amounts, interest rates, and terms. Let's calculate the interest for each note:

1. Note from Baker: Principal = $42,000, Rate = 12%, Term = 120 days. Interest = $42,000 × 0.12 × (120/365) = $440
2. Note from Charlie: Principal = $32,000, Rate = 9%, Term = 90 days. Interest = $32,000 × 0.09 × (90/365) = $252
3. Note from Abel: Principal = $25,000, Rate = 6%, Term = 60 days. Interest = $25,000 × 0.06 × (60/365) = $246

The interest accrued on each note is as follows: Note from Baker: $440, Note from Charlie: $252, Note from Abel: $246.