On August 1,2013,Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965.The note is due in 90 days and has an interest rate of 8%.What would be the total amount collected at the maturity date?
A)$123,965.00
B)$2,479.30
C)$126,444.30
D)$121,485.70
E)$133,882.20

Question

Quizplus · Accepted Answer

To calculate the total amount collected at the maturity date, we need to calculate the interest accrued on the note receivable.

Principal amount of the note = $123,965

Interest rate = 8% 
Time period = 90/360 (as the note is due in 90 days and interest rate is annual, we need to use 90/360 to find the interest for 90 days)

Simple interest = (Principal × Rate × Time) 
= (123965 × 0.08 × 90/360) 
= $2,479.20

Total amount collected at maturity = Principal + Interest 
= 123965 + 2479.20 
= $126,444.30

Therefore, the correct answer is C.

On August 1,2013,Ace Corporation Accepted a Note Receivable in Place