Asked by Marissa Aguilar on Jun 03, 2024
Verified
On February 1 Carson Company received a $9000 4% four-month note receivable. The cash to be received by Carson Company when the note becomes due is
A) $120.
B) $9000.
C) $9120.
D) $9360.
Note Receivable
A written promise to receive a specific amount of money at a future date.
Cash To Be Received
Expected cash inflows from various sources, such as sales, loans, and investments, not yet received but anticipated in the future.
Interest Rate
The percentage of the loan amount charged to the borrower as interest, usually presented as an annual rate.
- Recognize the appropriate interest calculation for notes receivable.
Verified Answer
HR
Humberto RomeroJun 09, 2024
Final Answer :
C
Explanation :
To calculate the cash to be received when the note becomes due, we need to calculate the interest on the note first.
Interest = Principal x Rate x Time
= $9000 x 4% x (4/12) year
= $120
Therefore, the cash to be received by Carson Company when the note becomes due is the sum of the principal and the interest.
Cash to be received = Principal + Interest
= $9000 + $120
= $9120
Interest = Principal x Rate x Time
= $9000 x 4% x (4/12) year
= $120
Therefore, the cash to be received by Carson Company when the note becomes due is the sum of the principal and the interest.
Cash to be received = Principal + Interest
= $9000 + $120
= $9120
Learning Objectives
- Recognize the appropriate interest calculation for notes receivable.