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17 July, 17:28

At December 31 of the current year, Cart Corporation has a $16,000 Notes Receivable from a customer. Interest of 5% has accrued for 9 months on the note. What will be reported on the Balance Sheet?

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  1. 17 July, 19:41
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    Interest receivable $600

    Explanation:

    The interest is just for 9 months and the cash for the interest has not been received yet, so debit Interest Receivable.

    Interest is calculated using the formula:

    interest=Principal x rate x time

    $16,000 x 5% x 9/12 = $600

    Interest Revenue would be credited for $600, but that is reported on the Income Statement, not the Balance Sheet.
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