As promise for future payment, Carlock Systems received a six-month, 12% note for $50,000 from a customer on November 1, Year 1. The note is due on April 30, Year 2. Assuming the company’s accounting period ends on December 31, how much interest revenue should be recognized during Year 1 and Year 2 under accrual accounting? Year 1: $2,000; Year 2: $1,000 Year 1: $0; Year 2: $6,000 Year 1: $1,000; Year 2: $5,000 Year 1: $1,000; Year 2: $2,000
As promise for future payment, Carlock Systems received a six-month, 12% note for $50,000 from a customer on November 1, Year 1. The note is due on April 30, Year 2. Assuming the company’s accounting period ends on December 31, how much interest revenue should be recognized during Year 1 and Year 2 under accrual accounting? Year 1: $2,000; Year 2: $1,000 Year 1: $0; Year 2: $6,000 Year 1: $1,000; Year 2: $5,000 Year 1: $1,000; Year 2: $2,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As promise for future payment, Carlock Systems received a six-month, 12% note for $50,000 from a customer on November 1, Year 1. The note is due on April 30, Year 2. Assuming the company’s accounting period ends on December 31, how much interest revenue should be recognized during Year 1 and Year 2 under accrual accounting?
Year 1: $2,000; Year 2: $1,000
Year 1: $0; Year 2: $6,000
Year 1: $1,000; Year 2: $5,000
Year 1: $1,000; Year 2: $2,000
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