On september 5, sheffield company discounted at Sunshine bank a 9000.00 (Maturity Value), 120-day note dated June 5, Shunshine's discount rate was 9% What proceeds did sheffield company receive
To determine the proceeds that Sheffield Company received, we need to calculate the discount amount subtracted from the maturity value of the note.
Step 1: Calculate the discount amount:
Discount Amount = Maturity Value * Discount Rate * Time
Time = (number of days from June 5th to September 5th) / 365
Number of days from June 5th to September 5th: 120 days
Time = 120 / 365 = 0.3288 (approx.)
Discount Amount = 9000 * 0.09 * 0.3288 ≈ $263.34
Step 2: Calculate the proceeds received by Sheffield Company:
Proceeds = Maturity Value - Discount Amount
Proceeds = 9000 - 263.34 ≈ $8736.66
Therefore, the Sheffield Company received approximately $8736.66 as proceeds from the discounted note.