Question

On September 1, 2021, Middleton Corp. lends cash and accepts a $1,700 note receivable that offers 7% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021

Answer 1

The interest revenue in 2021 is $39.44.

Step-by-step explanation:

The amount of lending cash and accepting = $1700

Interest rate = 7% per annum

Therefore the interest rate per month = 7% / 12 = 0.58%

Now find the interest revenue by multiplying 1700 with per month interest rate and the number of months. Since the lending and accepting date is 1st September. So only 4 months remain in 2021.

The interest revenue in 2021 = 1700 × 0.58 ×4 = $39.44