How much interest revenue should be accrued for a 90-day note receivable of $10,000 at a 12% interest rate by December 31?

To determine the interest revenue that should be accrued for a 90-day note receivable of $10,000 at a 12% interest rate, it is important to first understand how to calculate simple interest.

The formula for calculating interest is:

Interest = Principal × Rate × Time

In this scenario:

• The principal amount (the amount of the note receivable) is $10,000.
• The annual interest rate is 12%, or expressed as a decimal, 0.12.
• The time period for the note is 90 days. Since interest rates are typically annual, we need to express this time in years. There are 360 days in a financial year (common for interest calculations), so 90 days is 90/360, which simplifies to 0.25 years.

Now, substituting these values into the formula:

Interest = $10,000 × 0.12 × (90/360)

This simplifies to:

Interest = $10,000 × 0.12 × 0.25 Interest = $10,000 × 0.03 Interest = $300

Therefore, the accrued interest revenue for the 90-day note receivable is $300. This amount reflects the revenue