TRN sold $40,000, of goods and accepted the customer's $40,000 10%, 1-year note payable in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30? a. $0. b. $2,000. c. $4,000. d. $8,000.

Question

Business

Kaylin

4 December, 20:06

TRN sold $40,000, of goods and accepted the customer's $40,000 10%, 1-year note payable in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30? a. $0. b. $2,000. c. $4,000. d. $8,000.

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Answers (1)

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Jenkins · Answer 1

b. $2,000

Explanation:

The computation of the interest amount is shown below:

= Sale value of goods * rate of interest * (number of months : total number of months in a year)

= $40,000 * 10% * (6 months : 12 months)

= $2,000

The 6 months is calculated from June 30 to December 31.

So, the b option is correct and rest options are wrong.