FREE Trial

On August 1, 2019, Colombo Co.s treasurer signed a note promising to pay $2,400,000 on December 31, 2019. The proceeds

Question:

On August 1, 2019, Colombo Co.’s treasurer signed a note promising to pay $2,400,000 on December 31, 2019. The proceeds of the note were $2,340,000.


Required:

a. Calculate the discount rate used by the lender.

b. Calculate the effective interest rate (APR) on the loan.

c. Use the horizontal model (or write the journal entry) to show the effects of

1. Signing the note and the receipt of the cash proceeds on August 1, 2019.

2. Recording interest expense for the month of September.

3. Repaying the note on December 31, 2019.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!

Step by Step Answer:

Answer rating: 66% (12 reviews)

a Discount Principal Maturity value Proceeds 2 400 000 2 340 000 60 000 Discount rate Discount Princ…View the full answer


answer-question
Answered By
tutor-profile-image
Nazrin Ziad
I am a post graduate in Zoology with specialization in Entomology.I also have a Bachelor degree in Education.I posess more than 10 years of teaching as well as tutoring experience.I have done a project on histopathological analysis on alcohol treated liver of Albino Mice. I can deal with every field under Biology from basic to advanced level.I can also guide you for your project works related to biological subjects other than tutoring.You can also seek my help for cracking competitive exams with biology as one of the subjects.
3.30+ 2+ Reviews 10+ Question Solved
Related Book For  answer-question
Accounting What the Numbers Mean

Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

See More Books
Question Details
Chapter # 7
Section: Exercises
Problem: 6
View Solution
Create a free account to access the answer
Cannot find your solution?
Post a FREE question now and get an answer within minutes. * Average response time.
Question Posted: October 28, 2019 08:01:32
See More Questions

Students also viewed these Business questions

Q:
Eugene Ables ran an excavation company. He borrowed $500,000 from the Highland Park State Bank. Ables signed a note promising to repay the money and an agreement giving Highland a security interest...
A:
Yes to both questions The bank had a valid security interest in all......
Q:
Massimo Company has been operating for one year (2013). You are a member of the management team investigating expansion ideas, all of which will require borrowing funds from banks. At the start of...
A:
Req 1 Assets 5 500 Liabilities 2 500 Shareholders Equity 3 000 Req 2 Req 3 Assets 6 850 Liabilities......
Q:
Adamson Inc. is a small manufacturing company that makes model trains to sell to toy stores. It has a small service department that repairs customers trains for a fee. The company has been in...
A:
Req 1 Req 2 Since the transaction in i occurs between the shareholder and other person outside the c......
Q:
The matrix A below has λ = 2 as an eigenvalue. Find the geometric multiplicity of λ = 2 using your calculator only for row-reducing matrices. 18-15 33 -151 -4 8-6 6 9-16...
A:
If 2 is an eigenvalue of A the matrix A 2I 4 will be singular and its null space will......
Q:
Explain how Performance Readiness can be applied to teams. Provide examples.
A:
Just as individuals have different Performance Readiness levels so do teams For......
Q:
The following data are from a completely randomized design. a. Compute the sum of squares between treatments. b. Compute the mean square between treatments. c. Compute the sum of squares due to...
A:
a 156 142 134 3 144 6 156 144 2 6 142 144 2 6 134 144 2 1 4......
Q:
Consider the following premerger information about Firm A and Firm B: Assume that Firm A acquires Firm B via an exchange of stock at a price of $20 for each share of Bs stock. Both A and B have no...
A:
ANSWER To analyze the effects of the merger between Firm A and Firm B we can follow these steps a Calculate the new earnings per share EPS for Firm A after the merger First determine the total earning......
Q:
Three uniform spheres are fixed at the positions shown in Fig. 12.36. (a) What are the magnitude and direction of the force on a 0.0150-kg particle placed at P? (b) If the spheres are in deep outer...
A:
IDENTIFY Use Eq 12 1 to find each gravitational force Each force is attract......
Q:
B Corp. is an accrual-basis, calendar-year C corporation with a single individual shareholder, Ms. B. At year-end, B Corp. had $600,000 accumulated and current E&P as it prepared to make its only...
A:
The comparative results to Ms B in receiving the cash vs the land would be as follows Cash dividend Ms B would receive 200 000 in cash B Corp s E P wo......
Q:
You are the vice president of marketing for a small software company that has developed new and novel spam-blocking software. You are charged with selecting the target market for the product launch....
A:
Innovators are defined as the first 2 5 percent of the buyers to adopt a new idea those beyond two s......
Q:
At March 31, 2019, the end of the first year of operations at Lukancic Inc., the firms accountant neglected to accrue payroll taxes of $9,600 that were applicable to payrolls for the year then ended....
A:
a b Failure to make the accrual resulted in an understatement......
Q:
On April 15, 2019, Powell Inc. obtained a sixmonth working capital loan from its bank. The face amount of the note signed by the treasurer was $1,200,000. The interest rate charged by the bank was...
A:
a Discount basis means interest is paid in advance Proceeds Face amount of note Interest 1 200......
Q:
Murphy Corporation began operations in 2008 and reported pretax financial income of $225,000 for the year. Murphys tax depreciation exceeded its book depreciation by $30,000. Murphys tax rate for...
A:
Excess depreciat......
Q:
Why do we try to avoid the radiation boundary conditions in heat transfer analysis?
A:
Radiation boundary conditions are not always avoided in heat transfer analysis but there are certain situations and reasons why they might be consider......
Q:
Heat generation is also referred to as energy generation or thermal energy generation. What do you think of these phrases?
A:
The phrases heat generation energy generation and thermal energy generation are all......
Q:
Heat flux meters use a very sensitive device known as a thermopile to measure the temperature difference across a thin, heat conducting film made of kapton (k = 0.345 W/mK). If the thermopile can...
A:
To find the minimum detectable heat flux we can use the formula for heat conduction through a materi......
Q:
It is claimed that the temperature profile in a medium must be perpendicular to an insulated surface. Is this a valid claim? Explain.
A:
The claim that the temperature profile in a medium must be perpendicular to an insulated surface is not valid In fact it is generally not true for mos......
Q:
From a heat transfer point of view, what is the difference between isotropic and anisotropic materials?
A:
From a heat transfer point of view the key difference between isotropic and anisotropic materials li......
Q:
With reference to Exercise 6.39, show that for normal distributions k2= 2 and all other cumulants are zero. In exercise If we let KX(t) = lnMX (t), the coefficient of tr/r! in the Maclaurins series...
A:
M x e t M x t e t......
Q:
The Pletcher Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using...
A:
Planes ROI Controllable margin Average operating assets 12 Controllable margin 25 000 000 Controllab......
Q:
It is impossible for an auditor to guarantee that a companys financial statements are free of all error because the cost to the company to achieve absolute accuracy (even if that were possible) and...
A:
The auditors opinion is that the identified financi......
Q:
To what extent is the auditors opinion an indicator of a companys future financial success and future cash dividends to stockholders?
A:
The standard four paragraph independent auditors report is n......
Q:
Effects of stock split and stock dividend on EPS Required: a. For the year ended December 31, 2009, Finco, Inc., reported earnings per share of $3.12. During 2010 the company had a 3-for-1 stock...
A:
a Original earnings per share is 3 12 To reflect a 3 for 1 stock split di......
Modern Electrodynamics 1st Edition - ISBN: 0521896975 - Free Book