On September 30, 2014. Regal Bank loaned S50.000 to Gary Crag on a one-year 6% n

Question

On September 30, 2014. Regal Bank loaned S50.000 to Gary Crag on a one-year 6% note. Compute the interest for the years ended December 31, 2014 and 2015, on the Crag note. Round interest calculations to the nearest dollar. Start by determining the formula needed to compute interest. Now determine interest for the years ended December 31, 2014 and 2015, on the Crag note. Compute the interest for the years ended December 31, 2014 and 2015, on the Crag note. Round interest calculations to the nearest dollar. Which party has a note receivable? a note payable? Interest revenue? Interest expense? How much in total would Craig pay the bank if he pays off the note early on April 30, 2015?

Explanation / Answer

1)

Issue date Sep 30,2014

Issue amount $50,000

Interest rate 6%

Interest for December 31, 2014 = Principal x Rate x Time = $50,000 x 6% x 3 / 12 = $750

Interest for December 31, 2015 = $50,000 x 6% x 12 / 12 = $3,000

2)

a) Note receivablle by Regal Bank

b) Note payable by Gary Craig

c) Interest revenue of Regal Bank

d) Interest expense of Gary Craig

3)

Amount payable to bank on April 30, 2015 = Interest from Jan 1 2015 to April 30,2015 + Principal

= $50,000 x 6% x 4 / 12 + $50,000 = $51,000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.