Asked by Summer Garrett on Jun 03, 2024
Verified
On June 8, Williams Company issued an $80,000, 5%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note?
A) $82,600
B) $84,000
C) $81,333
D) $88,200
Maturity Value
The amount payable to the holder of a financial instrument at its maturity date.
Note Payable
A written promise to pay a certain amount of money, typically including interest, by a certain date; a form of credit or loan.
360-Day Year
An accounting practice that simplifies interest calculation by assuming a year has 360 days.
- Grasp the significance of opting for specialized bank accounts in facilitating payroll management activities.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
C
Explanation :
Step 1: Find the interest on the note payable:
Interest = Principal x Rate x Time
= $80,000 x 5% x 120/360
= $1,333.33
Step 2: Find the maturity value of the note payable:
Maturity Value = Principal + Interest
= $80,000 + $1,333.33
= $81,333.33
Therefore, the correct answer is C.
Interest = Principal x Rate x Time
= $80,000 x 5% x 120/360
= $1,333.33
Step 2: Find the maturity value of the note payable:
Maturity Value = Principal + Interest
= $80,000 + $1,333.33
= $81,333.33
Therefore, the correct answer is C.
Learning Objectives
- Grasp the significance of opting for specialized bank accounts in facilitating payroll management activities.