Answered: Cash is borrowed on a 2-month note…

Cash is borrowed on a 2-month note payable. If the interest cost to borrow is RO 400 what is the actual interest rate on this note? a. 12.00% b. 10.00% c. 20.00% d. 22.50%

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 16Q: Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual...

See similar textbooks

Related questions

Q: Company K borrowed $10,000 on November 1. The note has an interest rate of 8% and a term of 120…

A: Notes are a form of debt or loan for the business, on which it has to make regular interest…

Q: 2. A bank offers a 272 - day discounted loan at a simple discount rate of 12%. (a) How much money…

A: Solution Concept Simple interest rate is the rate that does not have the effect of compounding To…

Q: A note with a face value of $4300 is discounted at 3%. If the discount was $21, find the length of…

A: Calculation of length of the loan in days:The length or duration of the loan is approximately 60…

Q: Devon takes out a loan of $1500 at 6 1/2 % simple interest for 56 months. What is the maturity value…

A: A method of computing interest amounts in which the compounding effect was not considered by the…

Q: On May 15, Maynard Co. Borrowed cash from texas bank by issuing a 60 day note with a face amount…

A: Notes payable is a negotiable instrument signed by the promisor who agreed to pay a certain amount…

Q: Find the interest earned on an investment of $10,000 into a money market account that pays a simple…

A: Investments are made to earn interest income. The interest may be earned by way of simple interest…

Q: A bank charges 1 ½% per month on the unpaid balance for purchases made with its credit card. This is…

A: The equivalent effective annual rate can be calculated through the compounding interest formula. The…

Q: On January 26, Bella Co. borrowed cash from Conrad Bank by issuing a 120-day note with a face amount…

A: A promissory note can be described as a legal document that documents a loan between the lender and…

Q: How much is the interest if you need to borrow 400,000 for one year with 475,000 line credit, where…

A: Interest = amount borrowed * rate of interest

Q: An amount of P14,000 is borrowed at a discount rate of 10%, find the proceeds if the length of the…

A: Par value = P14000 Discount rate = 10% Period = 180 Days

Q: A bank charges interest rate of 5.50% on loans. The interest rate compounds monthly. What is the…

A: Effective annual interest rate is referred as the interest rate which is adjusted for compounding…

Q: Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordinary…

A: Solution Rate (in %) for the loan = Interest / principal amount * 360/ days of loan

Q: Mr. Dizon borrowed P35,000.00 from the cooperative bank. Find the simple interest if it is to be…

A: Given information Amount borrowed (Principal) =P 35,000 Interest rate= 1.5% per month Period for…

Q: 1.What is the effective interest rate of a simple discount note for $4,500 at a bank discount rate…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: A 100-day note with a face amount of $54,000 and interest rate of 9% is issued on June 1. Required:…

A: 1.

Q: On May 15, Franklin Co. borrowed cash from Dakota Bank by issuing a 90-day note with a face amount…

A: (a) The issued note cannot be discounted. It is issued at face value. Therefore, the proceeds of the…

Q: A credit is paid as follows: a down payment corresponding to 30% of the value of the credit, 16…

A: Fist we need to calculate present value of all payments starting at 3 months after by using annuity…

Q: You decide to discount a$5250, 345-day note at 3% to your bank at a discount rate of 4.5% on day…

A: Calculation of Proceeds:Assuming there are 360 days in a year.The proceeds are $5,309.80.Excel…

Q: On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount…

A: a. In this case, the note is not discounted. Hence, the proceeds amount of the note is equal to the…

Q: Karen's Katering borrows $5,500 at 8.5% interest for 280 days. If the bank uses the exact interest…

A: Given data; Borrowed amount = $ 5,500 interest rate = 8.5% number of days of borrowing = 280 days

Q: On January 1, you deposit K100 in an account that pays a nominal interest rate of 11.33463%, with…

A: Computation:

Q: Bank ZLY is charging customers a loan rate of 9.2% APR compounded monthly. What is the equivalent…

A: Equivalent Effective Annual rate= It refers to that interest rate which is actually earned on a…

Q: What is the annual rate of interest being charged on a 3-month note receivable of $51,000 if the…

A: Introduction: A note receivable is a documented promise to pay a set amount of money to another…

Q: A bank wishes to earn a 17% simple interest in discounting notes. If the term of the discount is 3…

A: Simple Interest: When the interest on the borrowed amount is computed on the principal at the loan…

Q: Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordinary…

A: We need to use ordinary interest formula to solve this problem Simple/ordinary interest…

Q: Suppose that you took out a loan at 10% interest for 283 days. If the amount of interest was…

A: In this question we need to find the amount of principal borrowed if amount of interest was $930.41…

Q: A bank charges a simple discount at 11% interest rate on short term loans. Find the sum received by…

A: Answer

Q: Borrowed $500 for 1 year and paid $50.00 in interest. Bank charged $5.00 service charge. What id…

A: Finance charge:The finance charge is the overall sum of the amount of interest and loan charges that…

Q: A loan of $2700 collecting simple interest at a 7.9% annual rate was repaid with a check for…

A: Solution : Given Amount of loan $2700 Simple interest rate 7.9% Amount repaid…

Q: the debt is paid off. How long does it take to pay off the credit card debt? ..... out the table row…

A: In this we need to consider the monthly payments and fill the table.

Q: The Sample Company discounts a $100,000 note receivable on 15 Máy 20x2. The following facts are…

A: Maturity value can be calculated as sum of principal and interest. Further, the discount amount can…

Q: A bank offered a 1-year loan to a commercial customer. The instrument is a discounted note with a…

A: Lets understand the basics. Effective interest rate is a rate at which interest is effectively paid.…

Q: An amount of 5 million is placed on deposit from 17 August to 31 December at 6.7%. What would be the…

A: As posted multiple independent questions we are answering only first question kindly repost the…

Q: On January 26, Elegant Co. borrowed cash from Conrad Bank by issuing a 30-day note with a face…

A: Proceeds of the note = Face value value of the note - discount amount

Q: Your credit card statement says that the card has a 0.0562% interest per day. What is the actual…

A: In this question we require to compute the actual annual interest rate if daily interest rate is…

Q: f a nine-month term deposit at a bank earns a simple interest rate of 9% per annum, how much should…

A: A term deposit is a fixed-term investment that includes deposits of money into an account at a…

Q: If a 9-month term deposit at a bank a simple interest rate of 9% per annum, how much will have to be…

A: Simple Interest is the interest amount calculated on the principal amount to the savings account.

Q: Cash is borrowed on a 2-month note payable. If the interest cost to borrow is RO 400, and the cash…

A: The calculation of actual interest rate on the note is shown hereunder : Interest cost RO 400 Cash…

Q: On January 26, Vibrant Co. borrowed cash from Conrad Bank by issuing a 90-day note with a face…

A: We know that if a note is an interest-bearing note the borrower is obligated to pay the whole…

Q: Max Wholesaler borrowed $7,500 on a 8%, 120-day note. After 45 days, Max paid $2,625 on the note.…

A: Intoduction:- A borrower or deposit-taking financial institution pays interest to a lender or…

Q: A bank charges a 12% bank discount on short-term loans. A borrower needs GH¢2000 cash to be repaid…

Q: The interest on a $3,000, 10%, 180-day note receivable is (assume 360 days per year} $150 $3,300…

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: An amount of $1632 is borrowed at a discount interest rate of 8% and the length of the loan is 4…

A: Borrowing Amount = 1632 Discount Rate = 8% Length of Loans = 4 months N = 4/12

Q: Calculate the bank discount and proceeds (in $) for the simple discount note. Use the ordinary…

A: Bank discount = face value × discount rate × number of years

Q: A man loans $4,000 at one interest rate and $5,000 at a 1% greater rate. The $5,000 loan earns $110…

A: Let the interest rate for $4000 = r Interest rate for $5000 = r + 0.01

Q: Calculate the bank discount and proceeds (in $) for the simple discount note. Use the ordinary…

A: Given: Face value = $85,000 Discount rate = 9.85% Term = 11 months or 330 days(11*30)

Q: Company A borrowed $25,000 on October 1 from a bank. The note has an interest rate of 8% and a term…

A: Interest expense is the monetary obligation of the borrower to pay regularly towards the sum…

Q: 3 The bank statement opposite shows transactions over a one-month period for a savings account that…

A: Interest income: It implies to the revenue that is earned by the lender from lending funds to the…

Q: Calculate the bank discount and proceeds (in $) for the simple discount note. Use the ordinary…

A: Answer

Question

Cash is borrowed on a 2-month note payable. If the interest cost to borrow is RO 400 what is the actual interest rate on this note? a. 12.00% b. 10.00% c. 20.00% d. 22.50%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Explanation -

VIEW

Solution -

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual interest rate of 9% a year for 3 months. A 20% compensating balance requirement raised the effective interest rate. a. The nominal annual rate on the loan was 11.25%. What is the true effective rate? b. What would be the effective cost of the loan if the note required discount interest? c. What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments?
A company collects an honored note with a maturity date of 24 months from establishment, a 10% interest rate, and an initial loan amount of $30,000. Which accounts are used to record collection of the honored note at maturity date? A. Interest Revenue, Interest Expense, Cash B. Interest Receivable, Cash, Notes Receivable C. Interest Revenue, Interest Receivable, Cash, Notes Receivable D. Notes Receivable, Interest Revenue, Cash, Interest Expense
Campus Flights takes out a bank loan in the amount of $200,500 on March 1. The terms of the loan include a repayment of principal in ten equal installments, paid annually from March 1. The annual interest rate on the loan is 8%, recognized on December 31. (Round answers to the nearest whole dollar if needed.) A. Compute the interest recognized as of December 31 in year 1 rounded to the whole dollar. B. Compute the principal due in year 1.
Proceeds from notes payable On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of 150,000. A. Determine the proceeds of the note, assuming the note carries an interest rate of 10%. B. Determine the proceeds of the note, assuming the note is discounted at 10%.
Ancient Grains Unlimited has an accounts receivable turnover ratio of 3.34 times. The net credit sales for the year are $567,920. What is the days sales in receivables ratio for 2018 (rounded to the nearest whole number)? A. 190 days B. 109 days C. 110 days D. 101 days
Jain Enterprises honors a short-term note payable. Principal on the note is $425,000, with an annual interest rate of 3.5%, due in 6 months. What journal entry is created when Jain honors the note?
Can the 10,000 note be repaid on May 1? Explain.
A ski company takes out a $400,000 loan from a bank. The bank requires eight equal repayments of the loan principal, paid annually. Assume no interest is paid or accumulated on the loan until the final repayment. How much of the loan principal is considered a current portion of a noncurrent note payable in year 3? A. $50,000 B. $150,000 C. $100,000 D. $250,000