Question & Answer: Kate Johnson, President of BQ Industries, executed a note payable on behalf of the company on October 1,…..

9. (3 points each) Kate Johnson, President of BQ Industries, executed a note payable on behalf of the company on October 1, 2014 in the amount of $300,000 with an interest rate of 8% for 9 months. Calculate the following items and show your calculations: The total interest to be paid over the term of the note The interest that should be accrued at December 31, 2014 (the Fiscal Year End) The maturity value of the note when the note is due The date that the note is due (maturity date) .

Kate Johnson, President of BQ Industries, executed a note payable on behalf of the company on October 1, 2014 in the amount of $300,000 with an interest rate of 8% for 9 months. Calculate the following items and show your calculations: The total interest to be paid over the term of the note The interest that should be accrued at December 31, 2014 (the Fiscal Year End) The maturity value of the note when the note is due The date that the note is due (maturity date)

Expert Answer

 

1) Total interest = Principal amount × Rate × Time

Total interest = $300,000 × 8% × 9/12

Total interest = $18,000

2) Accrued Interest = Principal amount × Rate × Time

Accrued Interest = $300,000 × 8% × 3/12

Accrued Interest = $6,000

3) Maturity Value = Principal + Interest

Maturity Value = $300,000 + $18,000

Maturity Value = $318,000

4) Issuance date = Oct 1, 2014

Number of months = 9

Due Date = July 1, 2015

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