Ahigher level of interest income can be received if a savings account offers a promotional rate.
true
false

Answer and Explanation:

1. The journal entries are shown below:

On 30-Jun-21

Note receivables Dr $41,000

     To Sales revenue $39,155  

     To Discount on note receivables $1,845

(Being sales revenue is recorded)  

On 31-Dec-21

Discount on note receivables ($1,845 × 6 ÷ 9) $1,230

     To Interest revenue $1,230

(Being interest accrual is recorded)  

On 31-Mar-22

Discount on note receivables  ($1,845 × 3 ÷ 9) $615

     To Interest revenue $615

(Being interest accrual is recorded)  

On 31-Mar-22

Cash Dr$41,000

     To Note receivables $41,000

(being note collection at maturity is recorded)  

2.  

Effective interest rate on note is

= $1,845 ÷ $39,155 × 12 ÷ 9

= 6.28%