on november 1, jasper company loaned another company $260,000 at a 9.0% interest rate. the note receivable plus interest will not be collected until march 1 of the following year. the company's annual accounting period ends on december 31. the amount of interest revenue that should be reported in the first year is:

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19-12-2022
Business

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on november 1, jasper company loaned another company $260,000 at a 9.0% interest rate. the note receivable plus interest will not be collected until march 1 of the following year. the company's annual accounting period ends on december 31. the amount of interest revenue that should be reported in the first year is:

Answer :

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edwardgk12 edwardgk12 · Answer 1 · 2022-12-21T10:04:14-05:00

The amount of interest revenue that should be reported by jasper company on the first year is $3,900.

How to calculate the amount of interest revenue that should be reported in the first year?

Interest revenue represents how much interest a company earned during a specific time period. This is interest earnings on any investments the business has or any debts it has provided to an individual or other entity. Interest revenue will be written on the income statement, so no matter what is the time period on the income statement, it will be the same period for the interest revenue as well.

Now, let's try to calculate it.

From the question given

- note was received at november 1

- The first year will ends on december 31

- Therefore, the interest revenue will be reported for 2 months in the first year (november and december)

Amount of interest revenue will be calculated as follows

= Note receivables * interest rate * (2 months / 12)

= 260,000 * 9% * 2/12

= $3,900

So, the amount of interest revenue that should be reported in the first year will be $3,900.

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