on october 1, 2021, stripes inc. lends $100,000 to another company and accepts a 24-month, 6% note. what is the amount of interest revenue stripes will report in its 2023 income statement?

Answer :

The amount of interest revenue stripes will report is $4500 in its 2023 income statement

Stripes will have finished paying the interest by the 24th month.

Stripes will pay three months' worth of interest in 2021. ( Oct, Nov, and Dec)

Stripes will pay interest for 12 months in 2022, and then for 24-(3+12)=9 months in 2023.

Interest for the nine months.

Calculating interest using the formula:

Interest = P x R X T/100

where P = principal amount

R = rate of interest

T = time in years

P =$100,000

R= 6%

T= 9 months

=$100,000*6*9/1200

=$6000 x 0.75

=$4,500

So, interest is $4500 to be reported in income statement

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