A Company Accepted a Trade Note from AB Enterprises, Face

question 61

Essay

A company accepted a trade note from AB Enterprises, face value $3,000, 15 percent interest-bearing, dated August 18, maturing in 180 days. Assume 360 days in a year.
Required:
Sixty days prior to the maturity of the note, the company endorsed the note with recourse (discounted) to XY Finance Company at a 9 percent annual rate. Compute the following:
(a) The company's proceeds from the note $_________________.
Computations:
(b) The company's interest earned (net of discount) $___________.
Computations:
(c) Give the journal entry for the company to record the discounting transaction, assuming that the end of their fiscal year is June 30. The discounting is to be recorded as a sale. Assume interest revenue was not recorded before the discounting.

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Definitions:

Behavior Tendencies

Refers to patterns or predispositions to act in certain ways across different situations and over time.

Empirically Derived

Developed or produced based on observed and measured phenomena rather than theory or pure logic.

Defense Mechanisms

Defense mechanisms that operate below the level of consciousness to fend off anxiety linked to unacceptable emotions or ideas.

Trait Theorists

Psychologists who study personality, focusing on identifying and measuring individual traits or characteristics.