London Company paid Frankfurt Company for merchandise with a $3,200, 90-day, 8% note dated May 10. If London Company pays the note at maturity, what is the amount of cash paid at that time?

Question

Quizplus · Accepted Answer

The amount of cash paid at maturity includes the principal plus interest. The interest can be calculated as follows: Interest = Principal × Rate × Time = $3,200 × 8% × (90/360) = $64. Therefore, the total amount paid at maturity is Principal + Interest = $3,200 + $64 = $3,264.

London Company Paid Frankfurt Company for Merchandise with a $3,200