Related to this note receivable,what amount of interest income would Siebens report on its 2013 income statement?
A) $667
B) $600
C) $800
D) $0

Question

Quizplus · Accepted Answer

The interest income would be computed as follows: $20,000 × 4% × 4/12 = $267. This interest income would be recognized in 2013, the year in which the note receivable was outstanding. However, the note receivable was discounted for $20,000 − ($20,000 × 4% × 4/12) = $19,733, so the amount of interest income to be recognized in 2013 would be $667 ($20,000 − $19,733).

Related to This Note Receivable,what Amount of Interest Income Would