Question

Soved Help Sou On May 1, 2018, Benz's Sandwich Shop loaned $18,000 to Mark Henry for one year at 10 percent interest. Required a. What is Benz's interest income for 2018? (Round your answer to the nearest dollar amount.) Interest income b. What is Benz's total amount of receivables at December 31, 2018? (Round your answer to the nearest dollar amount.) Receivables < Prev 4 of 8 !!! Next > PHILIPS from AP

Answer 1

Requirement a:

Interest income

$1,200

Calculations:

Interest should be calculated for 8 months (May 1 to Dec 31)

Interest income = 18,000 x 10% x (8/12) = $1,200

Requirement b:

Receivables

$19,200

Calculations:

Loan amount	$18,000
Interest income	$1,200
Total receivables at 12/31/2018	$19,200

Requirement c:

Cash provided by investing activities

$18,000

Requirement d:

Interest income

$600

Calculations:

For 2019, interest to be calculated for 4 months (From Jan.1 to May 1)

Interest income = 18,000 x 10% x (4/12) = $600

Requirement e:

Cash

$19,800

Calculations:

Loan amount	$18,000
Interest (1200+600)	$1,800
Total cash	$19,800

Requirement f:

Cash received by investing activities:
Notes receivable	$18,000
Interest income	$1,800

Requirement g:

Interest earned

$1,800

Total interest earned = 18,000 x 10% = $1,800