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On October 1, 2011, Coast Financial loaned Barr Corporation $300,000, receiving in exchange a nine-month, 12 percent note receivable. Coast ends its fiscal year on December 31 and makes adjusting entries to accrue interest earned on all notes receivable. The interest earned on the note receivable from Barr Corporation during 2012 will amount to _____?

On October 1, 2011, Coast Financial loaned Barr Corporation $300,000, receiving in exchange a nine-month, 12 percent note receivable. Coast ends its fiscal year on December 31 and makes adjusting entries to accrue interest earned on all notes receivable. The interest earned on the note receivable from Barr Corporation during 2012 will amount to _____?

Explanation
  • Interest formula: Interest = Principal × Rate × Time
    → $300,000 × 12% × (3/12) = $9,000

  • Since the fiscal year ends on December 31, 2011, the interest earned during 2012 covers only the first three months (Jan–March).