Question

On December 1, 2021, Davenport Company sold merchandise to a customer for $20,000. In payment for the merchandise, the customer signed a 6% note requiring the payment of interest and principal on March 1, 2022. How much interest revenue will the company recognize during 2021

Answer 1

Answer:interest revenue the  company recognize during 2021 is $100

Explanation:

 Interest for  2021 = Principal x Rate x Time

= $20,000 X 6% x 1/ 12 ( From 1st t0 31st December is 1 Month)

=$100

Journal to record accrued interest by  Davenport Company

Date                          Accounts Titles                          Debit         Credit

Dec 31st, 2021               Interest Receivable               $100

                                   Interest Revenue                                         $100

Therefore, the interest revenue the company will  recognize during 2021 is $100.