On June 8, Williams Company issued an $75,972, 6%, 120-day no required, round your answer to the nearest dollar.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
![**Problem Statement:**
On June 8, Williams Company issued a $75,972, 6%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note? When required, round your answer to the nearest dollar.
**Options:**
- a. $75,972
- b. $77,491
- c. $80,530
- d. $4,558
**Solution Explanation:**
To calculate the maturity value of the note, use the formula for the maturity value of a simple interest note:
\[ \text{Maturity Value} = \text{Principal} + \text{Interest} \]
First, calculate the interest:
- Principal = $75,972
- Rate = 6% per annum
- Time = 120 days
Convert the time to years by dividing by 360 (as per assumption of a 360-day year):
\[ \text{Time in years} = \frac{120}{360} = \frac{1}{3} \]
Now, calculate the interest:
\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time in years} \]
\[ \text{Interest} = 75,972 \times 0.06 \times \frac{1}{3} \]
\[ \text{Interest} = 1,519.44 \]
Next, calculate the maturity value:
\[ \text{Maturity Value} = 75,972 + 1,519.44 \]
\[ \text{Maturity Value} = 77,491.44 \]
Rounded to the nearest dollar, the maturity value is:
\[ \text{Maturity Value} = \boxed{77,491} \]
Therefore, the correct option is **b. $77,491**.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcc951479-387e-4d42-916e-169b7920bd18%2Fb78c3778-b3e5-48cc-a4fe-42a96f7dc835%2Fpcjlw48_processed.jpeg&w=3840&q=75)
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