**Exercise: Calculating Proceeds from a Promissory Note**On August 1, Batson Company issued a 60-day note with a face amount of $85,200 to Jergens Company for merchandise inventory. (Assume a 360-day year is used for interest computations.)a. **Determine the proceeds of the note assuming the note carries an interest rate of 12%.** \[_\_\_\_\_\_\_\_ (Insert calculation here)\]b. **Determine the proceeds of the note assuming the note is discounted at 12%.** \[_\_\_\_\_\_\_\_ (Insert calculation here)\]**Instructions:** - For part (a), calculate the simple interest based on the face amount and interest rate, then adjust the face amount of the note by this interest to find the proceeds. - For part (b), calculate the discount by applying the interest rate to the face value, reducing it from the face amount to find the proceeds.**Note:** This exercise illustrates the impact of interest rates on financial instruments over specified periods, essential for accounting and finance studies.

Answered: Image /qna-images/answer/4ce8aa26-c27a-47a7-bf04-131064b2e011.jpg

On August 1, Batson Company issued a 60-day note with a face amount of $85,200 to Jergens Company for merchandise in (Assume a 360-day year is used for interest computations.) a. Determine the proceeds of the note assuming the note carries an interest rate of 12%. b. Determine the proceeds of the note assuming the note is discounted at 12%.

On August 1, Batson Company issued a 60-day note with a face amount of $85,200 to Jergens Company for merchandise in (Assume a 360-day year is used for interest computations.) a. Determine the proceeds of the note assuming the note carries an interest rate of 12%. b. Determine the proceeds of the note assuming the note is discounted at 12%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On May 31, Baker Co. issued an $35,679, 8%, 120-day note payable to Samunck Co. Assume Baker's fiscal year ends on June 30. Assume a 360- day year for your calculations. a) What is the interest EXPENSE recognized by Baker in the current fiscal year? b) What is the maturity value of the note? c) What is the maturity date of the note?
Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 to Valley Co. on account. (Assume a 360-day year when calculating interest.) (a) Determine the due date of the note. (b) Determine the interest. (c) Determine the maturity value of the note. (d) Journalize the entry to record the receipt of the note from Potts on Feb. 3. (e) Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.
Akbar Associates issued 120-day note for $50,000 to a creditor on a account. The note was discounted at 6%. Assuming a 360-day year: a. What cash proceeds would Akbar receive from the note? b. How much would Akbar repay the creditor at the note's maturity? =
A business issued a 45-day, 6% note for $210,000 to a creditor. Principal and interest are payable at maturity. How is maturity value calculated in this case? What is the maturity value of the note?
On August 1, Batson Company issued a 60-day note with a face amount of $91,800 to Jergens Company for merchandise inventory. (Assume a 360-day year is used for interest calculations. a. Determine the proceeds of the note assuming the note carries an interest rate of 12%. b. Determine the proceeds of the note assuming the note is discounted at 12%.
On May 1, the Morse Company accepted a 60-day, $15,000 non-interest-bearing note from U Corporation. What is the maturity value of the note?
On January 26, Vibrant Co. borrowed cash from Conrad Bank by issuing a 30- day note with a face amount of $74,400. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of 5%.
Selkirk Company obtained a $15,000 note receivable from a customer on January 1, 2021. The note, along with interest at 9%, is due on July 1, 2021. On February 28, 2021, Selkirk discounted the note at Unionville Bank. The bank’s discount rate is 12%. Required: Prepare the journal entries required on February 28, 2021, to accrue interest and to record the discounting for Selkirk. Assume that the discounting is accounted for as a sale.
On January 1, YR01, Toyota Co. issued a two-year $1,000 note payable. The note bears interest of 7% paid yearly each December 31st. In addition, the principal amount will be paid back in two installments as follows: $400 will be paid back with the interest payment on December 31, YR01 and $600 will be paid back with the interest payment on December 31, YR02. At the date the note was issued, the market rate for similar notes payable was 6%. What is the present value of the note payable at the issue date of January 1, YR01 (assume an annual discounting period and round your final answer to the nearest penny)? a. $1,000.00 b. $1,014.77 c. $1,026.25 d. $ 1, 103.23 e. None of the answers provided are correct
On June 8, Williams Company issued an $74,068, 8%, 120-day note payable to Brown Industries. Assuming a 360-day year for your calculations, what is the maturity value of the note? When required, round your answer to the nearest dollar. a.$79,993 b.$76,043 c.$74,068 d.$5,925
On January 26, Nova Co. borrowed cash from Conrad Bank by issuing a 90-day note with a face amount of $ \$ 44, 400 $. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of $8\% $. b. Determine the proceeds of the note, assuming the note is discounted at $8\% $,
A business issued a 120-day, 6% note for $9,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. If an amount box does not require an entry, leave it blank. When required, round your answers to the nearest dollar. a. b.