BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Part A: Calculate the interest on the following notes:

images

Part B: Determine the maturity dates on the following notes:

images

Check Figure

1. Interest, $66.92

A.

To determine

Compute the interest for the given notes.

Explanation

Interest: The money charged by the lender for using lender’s funds is referred to as interest. So, interest is an expense for the borrower and revenue for the lender. The interest is generally, computed as a percentage of the money borrowed.

Compute the interest for the given notes.

Principal × Rate of Interest × Time of Note = Interest
1. $14,600 × 5.5% × 30 days ÷ 360 days = $66.92
2. 11,200 × 6.5% × 60 days ÷ 360 days = 121.33
3. 6,400 × 5.0% × 90 days ÷ 360 days = 80.00
4. 9,500 × 6.0% × 120 days ÷ 360 days = 190.00
5. 3,500 × 7.0% × 3 months ÷ 12 months = 61.25

Table (1)

B.

To determine

Compute the maturity dates.

Explanation

Maturity date: The date on which the borrower should pay the principal amount of loan, or bond, is referred to as maturity date.

Compute the maturity date for the note issued on January 18 with the life of note for 90 days.

Description Count
Number of days left in January (From 18th to 31st) 13 days
Number of days in February 28 days
Number of days in March 31 days
  72 days
Number of days required in April to total 90 days (90 days–72 days) 18 days
Total days of the term 90 days

Table (2)

Hence, the maturity date is 18th April.

Compute the maturity date for the note issued on February 12 with the life of note for 6 months.

Description Count
Number of months from February 12 to March 12 1 month
Number of months from March 12 to April 12 1 month
Number of months from April 12 to May 12 1 month
Number of months from May 12 to June 12 1 month
Number of months from June 12 to July 12 1 month
Number of months from July 12 to August 12 1 month
Total months of the term 6 months

Table (3)

Hence, the maturity date is 12th August.

Compute the maturity date for the note issued on June 21 with the life of note for 60 days.

Description Count
Number of days left in June (From 21st to 30th) 9 days
Number of days in July 31 days
  40 days
Number of days required in August to total 60 days (60 days–40 days) 20 days
Total days of the term 60 days

Table (4)

Hence, the maturity date is 20th August.

Compute the maturity date for the note issued on September 10 with the life of note for 4 months.

Description Count
Number of months from September 10 to October 10 1 month
Number of months from October 10to November 10 1 month
Number of months from November 10 to December 10 1 month
Number of months from December 10 to January 10 1 month
Total months of the term 4 months

Table (5)

Hence, the maturity date is 10th January.

Compute the maturity date for the note issued on November 17 with the life of note for 30 days.

Description Count
Number of days left in November (From 17th to 30th) 13 days
Number of days required in December to total 30 days (30 days–13 days) 17 days
Total days of the term 30 days

Table (6)

Hence, the maturity date is 17th December.

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is an REA diagram?

Accounting Information Systems

Why are there so many laws relating to HRM practices?

Foundations of Business (MindTap Course List)

Why do economists oppose policies that restrict trade among nations?

Principles of Macroeconomics (MindTap Course List)

PURCHASING POWER PARITY In the spot market, 12.8 Mexican pesos can bo exchanged for 1 U.S. dollar. A compact di...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Find all the answers to your study problems with bartleby.
Textbook solutions plus Q&A. Get As ASAP arrow_forward