On November 1, Jovel Company loaned another company $170,000 at a 12.0% 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:

Question

Malachi Nunez

Business

9 May, 04:49

On November 1, Jovel Company loaned another company $170,000 at a 12.0% 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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Azul Abbott · Answer 1

The amount of interest revenue that should be reported in the first year is: $3,400

Explanation:

Jovel Company loaned another company $170,000 at a 12.0% interest rate.

Interest amount per year = $170,000 x 12.0% = $20,400

Interest amount per month = $20,400/12 = $1,700

From November 1 to December 31, Jovel Company has loaned the another company for 2 months.

The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year:

$1,700 x 2 = $3,400