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3 November, 02:26

On September 1, 2021, Middleton Corp. lends cash and accepts a $4,000 note receivable that offers 10% 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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  1. 3 November, 03:29
    0
    Middleton Corp. will report interest revenue of 133.33 for the period of 2021.

    Explanation:

    The adjusting entry for the interest receivable for the period ended 31 december will require the Middleton Corp. to record the 4 months interest as interest revenue for the period ended 2021.

    The interest on the note for this period is ending 2021 is,

    Interest revenue = 4000 * 0.1 * 4/12 = 133.33

    The entry on 31 December will be

    Interest receivable 133.33 Dr

    Interest Revenue 133.33 Cr
  2. 3 November, 04:38
    0
    The amount of interest revenue Middleton corp will report during 2021 = $200

    Explanation:

    The following data were provided from the question;

    The amount of cash Middleton Corp borrowed or received = $4,000

    Interest rate = 10%

    Duration = 6 months = 6 : 12 = 0.5 year

    To calculate the amount of interest revenue Middleton corp will report during 2021;

    = cash receivable * interest rate * duration

    Therefore,

    Interest revenue = 4,000 x 0.10 x 0.5

    = $200
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