On September 1, 2021, Middleton Corp. lends cash and accepts a $2,100 note receivable that offers 8% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

Question

Business

Katie

14 January, 19:05

On September 1, 2021, Middleton Corp. lends cash and accepts a $2,100 note receivable that offers 8% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2021? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)

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Answers (1)

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Andreas Solis · Answer 1

Interest revenue = $56

Explanation:

Interest on note receivable calculation:

Note receivable amount * Interest rate * Numbers of period

Given,

Note rwceivable amount = $2100

Interest rate = 8%

Number of period = 6 month

Putting the values into the formula we can get

Interest on note receivable calculation = $2100 * 8% * (6/12)

= $168 * (6/12)

Interest for the notes Receivable for 6 months = $84

The note receivable will be matured on March 1 2022. But we have to calculate the interest for 2021. Therefore Middleton Corp. Will report interest revenue = $84 * (4/6)

= $56