Question

Rosewood Company made a loan of $12,200 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report during the years ending December 31, Year 1 and Year 2, respectively, would be:

Answer 1

Answer:For Year 1 = $549 , For year 2=$183

Step-by-step explanation:

Interest = Principal x Rate x Time ( Period)

For Year 1

Interest = P x R x T

= $12,200 x 6% x 9 / 12 ( Period from April to December

= $549

For year 2

Interest = P x R x T

= $12,200 x 6% x 3 / 12 ( Period from Jan of year 2 to April 1 st of year 2 since Ist year has been covered)

=$183