a. Maturity value of the note — May 201X Bird Company received 000 65-day min from Robertson dated June — Calculate following

On May 1, 201X, Bird Company received a $25,000, 65-day, 9% (35 min) note from Robertson Company dated May 1. On June 20, 201X, Bird discounted the note at Acorn Bank at a discount rate of 10.50%.

1. Calculate the following:

a. Maturity value of the note

b. Number of days the bank will hold the note until maturity date

c. Bank discount

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A.	Maturity Value of the note is $25,406.25.	Maturity Value of the note is $25,406.25.
$25,000 + ($25,000 x 9% x 65/360) = $25,406.25
B.	Number of days the bank will hold the note until maturity date is 15.
C.	Bank discount is $111.15.	Bank discount is $111.15.
$25,406.25 x 10.5% x 15/360 = $111.15
D.	Proceeds are $25,295.10.	Proceeds are $25,295.10.
$25,406.25 - $111.15 = $25,295.10

Date 201X	Date 201X	Account Titles and Description	Dr.	Dr.	Dr.	Dr.	Dr.	Cr.	Cr.	Cr.	Cr.	Cr.
June	20	Cash	25	2	9	5	10
		Interest Income							2	9	5	10
		Notes Receivable						25	0	0	0	00
		Discounted Note from Robertson

a. Maturity value of the note — May 201X Bird Company received 000 65-day min from Robertson dated June — Calculate following

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SOLUTION

BIRD CO. GENERAL JOURNAL