Respuesta :
At December 31, black should record interest revenue of $450.
the interest rate, for one year is:
interest=$20,000*0.09= $1,800
But only 3 months had passed(October 1 to December 31).
Hence Black can only record an interest revenue of 3 months i.e
$1,800/4= $450
What is an Interest Revenue?
Interest revenue is the earnings that an entity receives from its investments or debt. Under the accrual basis of accounting, a company should record interest revenue even if it has not yet been paid in cash for the interest; this is done with an accrual journal entry.
Under the cash basis of accounting, interest revenue is only recorded when the entity receives a cash payment for interest.
The main issue with interest revenue is determining where it should be recorded on the income statement. If an entity, such as a lender, earns interest revenue, interest revenue should be recorded in the revenue section at the top of the income statement. Alternatively, if an entity only earns interest revenue as an ancillary treasury function (as most companies do), interest revenue should be recorded in the Other Revenue and Expense section of the income statement, which follows the Operating Income section. Placing it here prevents readers of an entity's financial statements from being led to believe that revenue from continuing operations is higher than it is.
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