At December 31 of the current year, Cart Corporation has a $16,000 Notes Receivable from a customer. Interest of 5% has accrued for 9 months on the note. What will be reported on the Balance Sheet?

Interest receivable $600

Explanation:

The interest is just for 9 months and the cash for the interest has not been received yet, so debit Interest Receivable.

Interest is calculated using the formula:

interest=Principal x rate x time

$16,000 x 5% x 9/12 = $600

Interest Revenue would be credited for $600, but that is reported on the Income Statement, not the Balance Sheet.

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