Answer:
Option (C) $190,000
Explanation:
Data provided in the question:
Amount of the goods sold in exchange = $200,000
Note's market rate of interest at the time of sale = 12%
Discount note on September 1, 2005 = 10%
Now,
since the note is non-interest bearing.
As of September 1, 2005, 2 months have elapsed since the original issuance of the note on On July 1, 2005
Thus,
Only 6 months are remaining of the 8 month term.
Therefore,
Discount = $200,000 × 10% × 0.5 [ as 6 months = 0.5 year]
= $10,000
Therefore,
Proceeds from the discounting = $200,000 - $10,000
= $190,000.
hence,
Option (C) $190,000
