Question

On December 1, 2021, Davenport Company sold merchandise to a customer for $20,000. In payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2022. How much interest revenue will the company recognize during 2021

Answer 1

Answer:interest revenue the company recognize during 2021 is $100

Step-by-step explanation:

Interest for 2021 = Principal x Rate x Time

= $20,000 X 6% x 1/ 12 ( From 1st t0 31st December is 1 Month)

=$100

Journal to record accrued interest by Davenport Company

Date Accounts Titles Debit Credit

Dec 31st, 2021 Interest Receivable $100

Interest Revenue $100

Therefore, the interest revenue the company will recognize during 2021 is $100.