Question

CalculatorPrint Item On October 1, Black Company receives a 6% interest-bearing note from Reese Company to settle a $15,000 account receivable. The note is due in six months. At December 31, Black should record interest revenue of a.$225 b.$235 c.$232 d.$222

Answer 1

Option A, $225 is correct

Step-by-step explanation:

The interest revenue=face value of the note*interest rate*3/12

Three months of interest revenue is due from October 1st till December 31st.

The interest revenue that Black company would recognize =$15,000*6%*3/12=$225

The correct option is A,$225 amount of interest revenue would be recorded by Black Company in the year by debiting interest receivable(pending the maturity of the note) and crediting interest revenue