On March 1, 2020 Giant Jumbo Clown Costumes borrowed money from Second Friendly National Bank by issuing a $125,000, 180-day, non-interest bearing note. The note was discounted on a 13.5% basis. Assume 360 days in a year. Required: Compute the following: 1. How much money did Giant Jumbo receive? 2. What was the total amount of interest paid? 3. What is the effective 180-day interest rate on this note payable? 4. What is the approximate annual effective interest rate on this note payable? 5. Record the journal entry(ies)for the issuance of the note.
On March 1, 2020 Giant Jumbo Clown Costumes borrowed money from Second Friendly National Bank by issuing a $125,000, 180-day, non-interest bearing note. The note was discounted on a 13.5% basis. Assume 360 days in a year. Required: Compute the following: 1. How much money did Giant Jumbo receive? 2. What was the total amount of interest paid? 3. What is the effective 180-day interest rate on this note payable? 4. What is the approximate annual effective interest rate on this note payable? 5. Record the journal entry(ies)for the issuance of the note.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On March 1, 2020 Giant Jumbo Clown Costumes borrowed money from Second Friendly National Bank by issuing a $125,000, 180-day, non-interest bearing note. The note was discounted on a 13.5% basis. Assume 360 days in a year.
| Required: | |
| Compute the following: | |
| 1. | How much money did Giant Jumbo receive? |
| 2. | What was the total amount of interest paid? |
| 3. | What is the effective 180-day interest rate on this note payable? |
| 4. | What is the approximate annual effective interest rate on this note payable? |
| 5. | Record the |
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