Cyprus Corp

question 93

Essay

Cyprus Corp. received a 7%, 6-month promissory note with a face amount of $8,000 from the Mustafa Company for the sale of merchandise on May 1, 2014. Cyprus' accounting year­end is December 31.
REQUIRED: How much interest income will Cyprus Corp. recognize over the term of the note?

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Definitions:

Factory Overhead Cost

All indirect costs associated with manufacturing, such as maintenance and cleaning of equipment, which cannot be directly traced back to the production of specific goods.

Manufacturing Process

The sequence of operations or techniques used to transform raw materials or components into finished goods.

Insurance

A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Raw Materials Inventory

Consists of the basic materials and components required in the production process, before undergoing any transformation.