Question 1

Ralph Corporation accepted a $15,000, 11%, 120-day note dated August 19 from Jay Company in settlement of a past bill. On October 20, Ralph Corporation decided to discount the note at a discount rate of 12%. The proceeds to Ralph Corporation is:

Accepted Answer

A)   $1,517.97
B)   $1,517.79
C)   $15,249.73
D)   $15,249.37
E)   None of these D

Question 2

Use ordinary interest:

Accepted Answer

A. $93,750
B. 110 days
C. $90,598.96

Question 3

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

Accepted Answer

A)   Principal proceeds
B)   Maturity value
C)   Bank discount rate
D)   Discount period
E)   None of these A

Question 4

Jone Corporation accepted a $25,000, 8%, 120-day note on July 8. Jone discounted the note on September 4 at Rool Bank at 7%. What proceeds did Jone receive? Use ordinary interest.

Accepted Answer

The answer of Jone Corporation accepted a $25,000, 8%, 120-day...

Question 5

A promissory note:

Accepted Answer

A)   Is an oral promise
B)   Is a conditional promise
C)   Has a fixed time
D)   Has a variable time in the future to be paid
E)   None of these

Question 6

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28 at the Reno Bank at 14%. The proceeds to Jill would be:

Accepted Answer

A)   $341.69
B)   $16,236.09
C)   $303.00
D)   $16,277.78
E)   None of these

Question 7

The maker of a promissory note issues the note.

Accepted Answer

A) True 
 B)False

Question 8

Abe Corp. discounted a 120-day note with a maturity value of $8,000 dated June 8 at the Village Bank on Sept. 2 at a discount rate of 9%. Use ordinary interest. How much did Abe receive?

Accepted Answer

The answer of Abe Corp. discounted a 120-day note with...

Question 9

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10 is:

Accepted Answer

A)   $22,912.67
B)   $20,291.67
C)   $21,029.67
D)   $22,219.76
E)   None of these

Question 10

The maturity date of a promissory note represents when only the principal is due.

Accepted Answer

A) True 
 B)False

Question 11

A $15,000, 6%, 50-day note dated November 8 is discounted at 5% on November 28. The proceeds of the note would be:

Accepted Answer

A)   $14,936.46
B)   $15,610.64
C)   $63.54
D)   $15,061.98
E)   None of these

Question 12

The maturity value of an interest-bearing note is principal minus interest.

Accepted Answer

A) True 
 B)False

Question 13

The calculation of the bank discount when discounting an interest-bearing note uses maturity value.

Accepted Answer

A) True 
 B)False

Question 14

An interest-bearing note can be discounted before the maturity date.

Accepted Answer

A) True 
 B)False

Question 15

All interest-bearing notes must have the rate stated on the note.

Accepted Answer

A) True 
 B)False

Question 16

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

Accepted Answer

A)   $14,600
B)   $15,400
C)   $400
D)   $15,000
E)   None of these

Question 17

On July 18, Aui Lester accepted a $15,000, 7 3/4%, 180-day note from Ryan O'Flynn. On October 5, Aui discounted the note at Brome Bank at 8 1/4%. What proceeds did Aui receive? Use ordinary interest.

Accepted Answer

The answer of On July 18, Aui Lester accepted a...

Question 18

A simple discount note results in a higher interest rate (effective rate) than a simple interest note.

Accepted Answer

A) True 
 B)False

Question 19

Use ordinary interest:

Accepted Answer

The answer of Use ordinary interest: ...

Question 20

A $120,000, 5%, 200-day note dated June 6 is discounted on October 8. The discount period is:

Accepted Answer

A)   124 days
B)   76 days
C)   142 days
D)   67 days
E)   None of these

Exam 17: Promissory Notes, Simple Discount Notes, and the Discount Process

Ralph Corporation accepted a $15,000, 11%, 120-day note dated August 19 from Jay Company in settlement of a past bill. On October 20, Ralph Corporation decided to discount the note at a discount rate of 12%. The proceeds to Ralph Corporation is:

Use ordinary interest:

In calculating the bank discount when discounting an interest-bearing note, which one of the following is not used in the calculation?

Jone Corporation accepted a $25,000, 8%, 120-day note on July 8. Jone discounted the note on September 4 at Rool Bank at 7%. What proceeds did Jone receive? Use ordinary interest.

A promissory note:

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28 at the Reno Bank at 14%. The proceeds to Jill would be:

The maker of a promissory note issues the note.

Abe Corp. discounted a 120-day note with a maturity value of $8,000 dated June 8 at the Village Bank on Sept. 2 at a discount rate of 9%. Use ordinary interest. How much did Abe receive?

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10 is:

The maturity date of a promissory note represents when only the principal is due.

A $15,000, 6%, 50-day note dated November 8 is discounted at 5% on November 28. The proceeds of the note would be:

The maturity value of an interest-bearing note is principal minus interest.

The calculation of the bank discount when discounting an interest-bearing note uses maturity value.

An interest-bearing note can be discounted before the maturity date.

All interest-bearing notes must have the rate stated on the note.

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest) :

On July 18, Aui Lester accepted a $15,000, 7 3/4%, 180-day note from Ryan O'Flynn. On October 5, Aui discounted the note at Brome Bank at 8 1/4%. What proceeds did Aui receive? Use ordinary interest.

A simple discount note results in a higher interest rate (effective rate) than a simple interest note.

Use ordinary interest:

A $120,000, 5%, 200-day note dated June 6 is discounted on October 8. The discount period is: