Question

At December 31​ year-end, Corporation has note receivable from a customer. Interest of ​% has accrued for months on the note. What will income statement for the year ended December 31 report for this​ situation?

Answer 1

Answer: C. interest revenue of $560

Step-by-step explanation:

Accounting uses the accrual basis for calculation. This means that even though cash has not been received, revenue must still be recognized in the period it was acquired.

The revenue here is;

= 12,000 * 7% * 8/12 months

= $560

This revenue will therefore be recognized in the income statement as interest revenue.