Question

At December 31 year-end Connor Company has a $9,500 note from a customer. Interest of 12% has accrued for 8 months on the note. What will Connor's income statement for the year ended December 31, report for this situation? a. Nothing because the company has not received the cash yet. b. Interest Revenue of $760 c. Note Receivable of $9,500 d. Both B and C

Answer 1

b. Interest Revenue of $760

Step-by-step explanation:

The computation is shown below:

= Note amount × rate of interest × number of months ÷ total number of months

= $9,500 × 12% × 8 months ÷ 12 months

= $760

This amount would be represented as an interest revenue.

We simply applied the above formula so that the correct value could come

And, the same is to be considered

Therefore the correct option is b.