On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory. Assuming a 360-day year, determine the proceeds of the note assuming the note is discounted at 8%.
A) $55,200
B) $64,800
C) $58,800
D) $61,200

Question

Quizplus · Accepted Answer

The proceeds of the note are calculated by subtracting the discount from the face value. The discount is calculated as: $60,000 * 8% * (90/360) = $1,200. Therefore, the proceeds are $60,000 - $1,200 = $58,800.