Question

Computing the Proceeds from the Sale of Notes Receivable Below are several customer notes receivable that were sold without recourse. 1. An $8,000, 60-day, non-interest-bearing note sold after 15 days at 12% 2. A $9,000, 12%, 60-day note sold after 30 days at 14% 3. A $6,000, 10%, 90-day note sold after 30 days at 12% 4. A $10,000, 12%, 120-day note sold after 45 days at 15%

Answer 1

Answer -

Step - ( 1 ) - Information Given -

Details of several customer notes receivable that were sold without recourse -

1).  An $8000, 60-day, non-interest-bearing note sold after 15 days at 12%.

2). A $9000, 12%, 60-day note sold after 30 days at 14%.

3). A $6000, 10%, 90-day note sold after 30 days at 12%.

4). A $10000, 12%, 120-day note sold after 45 days at 15%.

.

Step - ( 2 ) - Computation of Proceeds from the Sale of Notes Receivable -

Note   Year = 360 Days.

Particulars	Note 1	Note 2	Note 3	Note 4
Face Value of Note	$8000	$9000	$6000	$10000
Interest to Maturity = [ Face value of note * Interest rate * Time ]	$0	$180 [ $9000 * 12% * ( 60 / 360 )]	$150 [ $6000 * 10% * ( 90 / 360 )]	$400 [ $10000 * 12% * ( 120 / 360 )]
Maturity Value = [ Face value of note + Interest to Maturity ]	$8000 [ $8000 + $0 ]	$9180 [ $9000 + $180 ]	$6150 [ $6000 + $150 ]	$10400 [ $10000 + $400 ]
Discount = [ Maturity value * Discount rate * Discount period ]	$120 [ $8000 * 12% * ( 60 - 15 / 360 )]	$107 [ $9180 * 14% * ( 60 - 30 / 360 )]	$123 [ $6150 * 12% * ( 90 - 30 / 360 )]	$325 [ $10400 * 15% * ( 120 - 45 / 360 )]
Proceeds = [ Maturity Value - Discount ]	$7880 [ $8000 - $120 ]	$9073 [ $9180 - $107 ]	$6027 [ $6150 - $123 ]	$10075 [ $10400 - $325 ]