Question

Descriptors are provided below for six situations involving notes receivable being discounted at a bank. In each case, the maturity date of the note is December 31, 2018, and the principal and interest are due at maturity. For each, determine the proceeds received from the bank on discounting the note. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

Answer 1

Answer:

$50,350

Explanation:

We can get the proceeds proceeds received by using the following method below.

Step 1

We first find our face value

Maturity value = Face value + Interest

= $50,000 + (50,000 × 8% × 9/12)

= $53,000

Proceeds received = Maturity value – Discount

Proceeds received= $53,000 – (53,000 × 10% × 6/12) = $53,000 - $2,650

Proceeds received= $50,350

Another way we can find our proceeds is

Maturity value = Face value + Interest = $50,000 + (50,000 × 8% × 9/12) = $53,000