Question

On September 1, 2015, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2015?

Answer 1

$40

Step-by-step explanation:

Given that,

note receivable = $1,000

Interest of note receivable = 12%

Time period = 4 months (September 1, 2015 to December 31st, 2015)

Interest revenue will Middleton Corp. report during 2015:

= Note amount × (Interest rate ÷ 12) × Time period

= $1,000 × (12% ÷ 12) × 4 months

= $1,000 × 0.01 × 4

= $40