Question

Zelda & Associates drew a nine-month, $450000 bill receivable, with 6% interest, on Kochi Dye Fabrics...

Zelda & Associates drew a nine-month, $450000 bill receivable, with 6% interest, on Kochi Dye Fabrics on 1 September 2018. Zelda & Associates' year-end is 31 December. The amount of interest on this bill to be recognised by Zelda & Associates in 2019 is:

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Answer #1

Solution

Formula for interest:

Amount of interest= Amount of bill receivable× rate%× number of months

Where,

Amount of bills receivable $450000

Interest rate 6%

Number of months(2019) 5 months(number of months are taken as 5 since the bill is drawn on 1 September 2018 and 4 months have passed till 31 December so now only 5 months will be left for 2019)

So

Amount of interest= 450000×6%×(5/12)= $11250.

Thus amount of bill to be recognised by Zelda and associates in 2019 is $11250.

In case you need any further help please comment below.

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