Question

On October 1, Black Company receives a 8% interest-bearing note from Reese Company to settle a $17,800 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a.$366 b.$353 c.$356 d.$363

Answer 1

c.$356

Step-by-step explanation:

Calculation to determine At December 31, what Black should record as interest revenue

Using this formula

Interest revenue= Account receivable × Rate of interest × Number of months ÷ (Total number of months in a year)

Let plug in the formula

Interest revenue= $17,800 × 8% × (3 months ÷ 12 months)

Interest revenue= $1,424 × (3 months ÷ 12 months)

Interest revenue= $356

Therefore At December 31, Black should record interest revenue of $356