Valix Finacc vol 1 Problem 6-17

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 6-17

Jan. 15  Notes receivable                                                                 500,000

                      Sales                                                                                                     500,000

Feb. 15  Cash                                                                                    496,875

               Interest expense                                                                    3,125

                      Notes receivable discounted                                                               500,000

               Principal                                                                                                      500,000

               Interest (500,000 x 12% x 6/12)                                                                        30,000

               Maturity value                                                                                             530,000

               Discount (530,000 x 15% x 5/12)                                                                      33,125

               Net proceeds                                                                                              496,875

July 15   Notes receivable discounted                                  500,000

                      Notes receivable                                                                                              500,000