On September 5th, Sheffield Company discounted at Sunshine Bank a 9000.00 (maturity value), 120-day note dated June 5th. Sunshine's discount rate was 9%. What proceeds did sheffield company receive. We are using 360 day and NOT 365

I did it both ways, 360 and 365. Look again

To calculate the proceeds Sheffield Company received, we need to determine the discount amount deducted from the maturity value.

First, let's calculate the discount period. The 120-day note is dated June 5th, and we want to find the discount on September 5th. Since we are using a 360-day year, the discount period is 3 months or 90 days.

Next, let's calculate the discount. The discount rate is 9%, and the maturity value is $9000. Using the formula:

Discount = Maturity Value * Discount Rate * Discount Period / 360

Discount = $9000 * 9% * 90 / 360 = $202.50

Finally, we can calculate the proceeds Sheffield Company received by subtracting the discount from the maturity value:

Proceeds = Maturity Value - Discount
Proceeds = $9000 - $202.50 = $8797.50

Therefore, Sheffield Company received $8797.50 in proceeds from Sunshine Bank.

To calculate the proceeds Sheffield Company received from the discounting of the note, we need to calculate the amount of discount. The discount is determined by multiplying the maturity value of the note by the discount rate and the time period, which is expressed in terms of the number of days.

First, we need to calculate the number of days from June 5th to September 5th. Since we are using 360 days in a year, we can simply subtract the dates:

September 5th - June 5th = 3 months * 30 days/month = 90 days

Next, we calculate the discount amount using the formula:

Discount = Maturity Value * Discount Rate * Time

Discount = $9,000 * 0.09 * (90/360)

Now we can calculate the proceeds received by Sheffield Company:

Proceeds = Maturity Value - Discount

Proceeds = $9,000 - Discount

Substituting the calculated discount, we can find the proceeds:

Proceeds = $9,000 - ($9,000 * 0.09 * (90/360))

Proceeds = $9,000 - ($9,000 * 0.09 * 0.25)

Proceeds = $9,000 - ($202.50)

Proceeds = $8,797.50

Therefore, Sheffield Company received $8,797.50 as the proceeds from the discounting of the note.

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"