The Face Value of a Note Is $1,250 with an Interest

question 7

Multiple Choice

The face value of a note is $1,250 with an interest rate of 13%. The time is based on 180 days in a 360-day year. The note has been discounted at 17% two months before the maturity of the note. What are the proceeds?

• A) $1,293.53
• B) $1,285.42
• C) $1,277.08
• D) $1,250.00

---

Definitions:

Direct Method

A cost allocation approach directly assigning service department costs to producing departments without any intermediate steps.

Sales Adjusted

The revision of sales figures to account for returns, allowances for damaged goods, and discounts given.

Cash Basis

An accounting method where transactions are recorded when cash is received or paid, without regard to when the transactions occurred.

Selling and Administrative Expense

Costs incurred by a company from its selling activities and the management of the overall company, excluding production costs.