Homework Answers
23. Option D credit to interest revenue $1000
Working:
Total Interest of 90 days =$150000*.08*90/360 = $ 3000
Therefore, 30 days interest =$3000*30/90=$1000
24. Option B. Debit to cash $150,450
Working:
| Maturity value of the note |
| = Principal + Interest |
| Interest |
| = Principal x Bond’s Interest rate x Time / 365 |
| =150000*8%*90/360 |
| 3000 |
| So, Maturity value |
| =150000+3000 |
| 153000 |
| Discount made by bank |
| = Maturity value x Discount rate x Unexpired period / 365 |
| = $153000*10%*60/360 |
| 2550 |
| So, amount received from bank |
| = Maturity value – Discount |
| = $153000-2550 |
| 150450 |
| So, option b is the correct option |
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