On October 12, Belleville Co. borrowed cash from Texas Bank by issuing a 30-day note with a face amount of $70,000.
a. Determine the proceeds of the note, assuming the note carries an interest rate of 6%.
b. Determine the proceeds of the note, assuming the note is discounted at 6%.
Answer:
a. $70,000
b. $69,650 [$70,000 – ($70,000 × 30/360 × 6%)]