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Verilux Company sold merchandise to Flight Corp on November 1, 2016, for $10,000 . Verilux accepted a promissory note from Flight Corp for $10,000 . The note has a term of 5 months and a stated interest rate of 7%. Verilux's accounting period ends on December 31, 2016 . What amount should Verilux recognize as interest revenue on December 31, 2016?

a. $ -0-
b. $ 116.67
c. $ 291.67
d. $ 280.00

Respuesta :

Answer:

b. $ 116.67

Explanation:

Given data

Sale value of merchandise = $10,000

Interest rate = 7%

The computation of the interest revenue on December 31, 2016 is shown below:

= Note amount × rate of interest × given number of months ÷ total number of months in a year

= $10,000 × 7% × 2 months ÷ 12 months

= $116.67

The two months are calculated from November 1 to December 31

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