Proceeds from Notes Payable On January 26, Elegant Co. borrowed cash from Conrad Bank by issuing a 60-day note Face amount of $42,000. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of X
Proceeds from Notes Payable On January 26, Elegant Co. borrowed cash from Conrad Bank by issuing a 60-day note Face amount of $42,000. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Proceeds from Notes Payable
On January 26, Elegant Co. borrowed cash from Conrad Bank by issuing a 60-day note with a
face amount of $42,000. Assume a 360-day year.
a. Determine the proceeds of the note, assuming the note carries an interest rate of 10%.
X
b. Determine the proceeds of the note, assuming the note is discounted at 10%.
|x
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The proceeds equal the cash initially received. Proceeds represents how much in value
the borrower is walking away with in cash or merchandise.
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