On September 5, Sheffield Company Discounted at Sunshine Bank a 9000.00 (maturity value), 120-day note dated June 5th Sunshine's discounted rate was 9%. What proceeds did Sheffield Company Receive?

To calculate the proceeds that Sheffield Company received for the discounted 120-day note, we need to determine the discount amount.

Step 1: Calculate the number of days from June 5th to September 5th.
Number of days = 90 (June) + 31 (July) + 31 (August) + 5 (September) = 157 days

Step 2: Calculate the discount amount.
Discount amount = Maturity value * Discount rate * Time period
Discount amount = $9000.00 * 9% * (157/360)
Discount amount = $343.75

Step 3: Calculate the proceeds.
Proceeds = Maturity value - Discount amount
Proceeds = $9000.00 - $343.75
Proceeds = $8656.25

Therefore, Sheffield Company received $8656.25 as proceeds for the discounted note.

To calculate the proceeds that Sheffield Company received, we need to understand the concept of discounting. Discounting is a process where the future value of an amount is reduced to its present value by deducting a certain discount percentage.

In this case, the maturity value of the note is $9,000 and it is discounted by Sunshine Bank. The discount rate offered by Sunshine Bank is 9%. The note is dated June 5th and has a maturity period of 120 days.

To calculate the proceeds, we need to calculate the discount on the maturity value and then subtract it from the maturity value.

First, let's calculate the discount:

Discount = Maturity Value * Discount Rate * Time

Discount = $9,000 * 0.09 * (120/360)

Here, we divide the time by 360 because banks typically use a 360-day year for discounting.

Discount = $270

Now, let's calculate the proceeds:

Proceeds = Maturity Value - Discount

Proceeds = $9,000 - $270

Proceeds = $8,730

Therefore, Sheffield Company received $8,730 as the proceeds from the discounted note.

The company gets the 9,000 - interest paid up front

the interest paid is
9,000 (120 days/days in year) (.09)
now you did not say if you were using an exact year of 365 days or a bankers year of 360 days, which makes calculations easier. I will assume a full year of 365 days.
9,000 * (120/365) * .09 = 266.30
so the company would get
9,000 -266.30 = 8733.70
If we used a banker's 360 day year, 120 days is 1/3 year
interest = (9,000/3)*.09 = 270.00
and the company gets
9,000-270 = 8730
Note that the company gets less and the bank gets more using a "banker's year"

Now using the 8730 the company actually got with the banker's year, let's find out what the effective interest rate was. I know this was not asked but it is "interesting"
the company paid 270 for 8730 for 1/3 year
so the effective rate is
(270/8730)*3 = .093
or 9.3 percent, not 9 percent. Remember that at the bank desk :)

we are using 360 would this still be right the way you fugured it