Silver Company received a two-month,6% note for $16,000 on August 5.Which of the following statements is true?
A)Silver will receive $16,000 plus interest of $960 at maturity.
B)Silver should record a total receivable due of $16,080 on August 5.
C)The principal of the note plus interest is due on October 15.
D)The maturity value of this note is $16,160.

Question

Quizplus · Accepted Answer

The maturity value of the note can be calculated as follows:

Principal amount = $16,000 
Interest for two months = ($16,000 x 6% x 2/12) = $160

Maturity value = Principal amount + Interest = $16,000 + $160 = $16,160

Therefore, option D is correct. Options A, B, and C are incorrect as the interest amount is already included in the maturity value and the entire amount will be due on the maturity date, which is October 5.

Silver Company Received a Two-Month,6% Note for $16,000 on August