Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2018. The note, along with interest at 6%, is due on June 30, 2019. On September 30, 2018, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 10%. What amount of cash did Ireland receive from Cloverdale Bank?

Question

Quizplus · Accepted Answer

$\begin{array}{ll}
\$ 40,000 & \text { Face amount } \
2,400 & \text { Interest to maturity }(\$ 40,000 \times 6 \%) \
 42,400 & \text { Maturity value } \
3,180 & \text { Discount }(\$ 42,400 \times 10 \% \times 9 / 12) \
\$ 39,220 & \text { Proceeds }
\end{array}$

Ireland Corporation Obtained a $40,000 Note Receivable from a Customer