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azamat
3 years ago
6

On June 1, 2021, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $510,000 a

nd a discount rate of 8%. Assuming straight-line amortization of the discount, what is the carrying value of the note as of September 30, 2021
Business
1 answer:
Tomtit [17]3 years ago
4 0

Answer: $503,200

Explanation:

Carrying value of note = Face value of note - Interest remaining

Interest remaining = Face value * Periodic interest rate * Number of months remaining / Total number of months for note

= 510,000 * 8%/2 * 2 / 6 months

= $6,800

Carrying value of note = 510,000 - 6,800

= $503,200

<em>Note: Note is for 6 months so periodic interest was divided by 2 to make it a semi-annual rate.</em>

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