Question

Determine the maturity date and compute interest for each note. (Use 360 days a year. Do not round intermediate calculations.) Note Contract Date Principal Interest Rate Period of Note (Term) 1. March 19 $ 28,000 6 % 60 days 2. May 11 33,000 8 90 days 3. October 20 21,000 4 45 days

Answer 1

Explanation:

The determination of the maturity date and the interest for each notes is as follows

Contract date    Maturity Month Maturity Date   Interest expenses

March 19                  May                         18                           $280

May 11                      August                     9                            $660

October 20             December               4                             $105

For March 19, the interest expense calculation is

= $28000 × 6% × 60 days ÷ 360 days

= $280  

For May 11, the interest expense calculation is

= $33,000 × 8% × 90 days ÷ 360 days

= $660

For October 20, the interest expense calculation is

= $21000 × 4% × 45 days ÷ 360 days

= $105