QUESTION 1 Incorrect Marked out of 2.00Flag question Rex Corporation accepted a

Question

QUESTION 1 Incorrect Marked out of 2.00Flag question Rex Corporation accepted a $10,000, 5% interest bearing note from Brooks Inc. on December 1, 2015 in exchange for machinery with a list sales price of $9,500. The note is payable on December 1, 2018. If the prevailing interest rate is 8%, what revenues should Rex report in its income statement for the year ended December 31, 2015 Use Excel or a financial calculator for the computations. Do not round until final answers. Round answers to the nearest dollar. Sales revenue$ Interest income $ Check

Explanation / Answer

Sales revenue: $ 10,000

Interest revenue (10,000*5%*1/12)= 41.67

Explanation: Sales revenue must be recognized for the actual amount of notes receivable i.e. $10,000

Interest revenue shall be recognized for the period from Dec 1,2017 to Dec 31, 2017.

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