Question

Taylor bank lends guarantee company $150,000 on january 1. guarantee company signs a $150,000, 8%, 9-month note. the entry made by guarantee company on january 1 to record the proceeds and issuance of the note is

Answer 1

Answer:

Explanation:

The journal entry to record the issuance of the note is shown below:

On January 1

Cash A/c Dr $150,000

    To Notes payable A/c  $150,000

(Being the issuance of the note is recorded)

To record this journal entry we debited the cash account and credited the note payable account so that the accurate posting can be done

Answer 2

We are given
P = $15,000
i = 8% per year
n = 9 months

First we convert the interest to per month
i = 8%/12 = 0.67%

And we solve for the future worth of the note
F = P ( 1 + i)^n
F = 15000 ( 1 + 0.0067)^9
F = $15929.12

The value of the note is $15929.12<span />