March 30 Loaned an officer of the company $45,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2025. May 30 Discounted the $45,000 note at a local bank. The bank’s discount rate is 9%. The note was discounted without recourse and the sale criteria are met. What is the cash received on the discounted note? What is the loss on sale of note receivable?

March 30 Loaned an officer of the company $45,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2025. May 30 Discounted the $45,000 note at a local bank. The bank’s discount rate is 9%. The note was discounted without recourse and the sale criteria are met. What is the cash received on the discounted note? What is the loss on sale of note receivable?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 26Q: A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer...

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March 30	Loaned an officer of the company $45,000 and received a note requiring principal and interest at 8% to be paid on March 30, 2025.
May 30	Discounted the $45,000 note at a local bank. The bank’s discount rate is 9%. The note was discounted without recourse and the sale criteria are met.

Similar questions

On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.
A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expense
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Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. $5,000 B. $5,050 C. $20,000 D. $19,950
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