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Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2021. The note, along with interest at 5%, is due on June 30, 2022. On September 30, 2021, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 9%. What amount of cash did Ireland receive from Cloverdale Bank?

Respuesta :

Answer:

$ 39,165.00  

Explanation:

the amount expected from customer in one year is the face value of the note receivable plus interest i.e $40,000*105%=$42,000

The interest on discounting is :

$42,000*9%*9/12=$2,835

The amount of cash that Ireland would receive from the Cloverdale Bank is the amount that Cloverdale would on maturity of the note receivable i.e $42,000, less the discount on the note of $2,385

cash received=$42,000-$2,835=$ 39,165.00  

Cloverdale would pay $ 39,165.00  on September 2021 to Ireland Corporation

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