On December 1 DEF Company agreed to accept a 10000 45day not

On December 1, DEF Company agreed to accept a $10,000 45-day note from a customer which bears 6% interest. Assume that no interest has been recorded during the year. If DEF uses the cash basis, how much interest revenue needs to be recorded on December 31? (calculate the portion of the year based on 360 days and round to the nearest dollar)

$50

$75

$600

$0

$25

		$50
		$75
		$600
		$0
		$25

Solution

No interest is to be recognized as DEF uses the cash basis and no interest is received during the year. Option 4 is correct