On December 1, 2018, Davenport Company sold merchandise to a customer for $38,000

Accounting Aug 05, 2020

On December 1, 2018, Davenport Company sold merchandise to a customer for $38,000. In payment for the merchandise, the customer signed a 9% note requiring the payment of interest and principal on March 1, 2019.

How much interest revenue will the company recognize during 2018 and 2019?

Expert Solution

Computation of the interest revenue for 2018:-

Interest revenue = $38,000 * 9% * 1/12

= $285

Computation of the interest revenue for 2019:-

Interest revenue = $38,000 * 9% * 2/12

= $570

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