Question

Houston Company receives a six-month note from a customer. The note has a face amount of $8,000 and an interest rate of nine percent. What is the total amount of interest income to be received

Answer 1

$360

Step-by-step explanation:

The computation of the total amount of interest income is shown below:-

Note amount = $8,000

Interest rate per year = 9%

Number of months = 6 months

Interest amount = Note amount × Interest rate per year × Number of months ÷ Total number of months in a year

= $8,000 × 9% × 6 ÷ 12

= $360

Therefore for computing the interest amount we simply applied the above formula.