**Problem Statement:**Rosewood Company made a loan of $9,000 to one of the company’s employees on April 1, Year 1. The one-year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, respectively?**Multiple Choice Options:**- $540 in Year 1 and $0 in Year 2- $0 in Year 1 and $540 in Year 2- $135 in Year 1 and $405 in Year 2- $405 in Year 1 and $135 in Year 2**Explanation:**To solve this, we need to calculate the interest for each fiscal year. 1. **Interest Calculation:** - The interest for a full year is calculated using the formula: \[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \] Here, Principal = $9,000, Rate = 6% = 0.06, Time = 1 year. - For Year 1, the period from April 1 to December 31 is 9 months. \[ \text{Interest for Year 1} = 9000 \times 0.06 \times \left( \frac{9}{12} \right) = 405 \] - For Year 2, the period from January 1 to March 31 is 3 months. \[ \text{Interest for Year 2} = 9000 \times 0.06 \times \left( \frac{3}{12} \right) = 135 \]2. **Conclusion:** Based on these calculations, the correct interest revenue Rosewood Company should report is: - **$405 in Year 1 and $135 in Year 2****Correct Answer:**- $405 in Year 1 and $135 in Year 2

In year 1, interest revenue will be recognized for the period April 1, Year1 to Dec 31 year 1. (9…

Rosewood Company made a loan of $9,000 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, espectively? Multiple Choice $540 in Year 1 and $0 in Year 2 $0 in Year 1 and $540 in Year 2

Rosewood Company made a loan of $9,000 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, espectively? Multiple Choice $540 in Year 1 and $0 in Year 2 $0 in Year 1 and $540 in Year 2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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