On April I. 2014. O\'Ntlll Firm Equipment Compel sold 1 tractor to Farms for $60

Question

On April I. 2014. O'Ntlll Firm Equipment Compel sold 1 tractor to Farms for $60,000 and agreed to delay collects of the selling price until.be later the harvest). Farms issued a note that was dated April I. 2014. and that had an interest rate of 4%. The tractor cost O'Neill $45,000. and it uses a perpetual inventory system. The note was paid on schedule. Required: (I) (a) Who is the maker of the note? (b) Who is the payee of the note? c) When was the note signed? (d) What is the face value of the note? (e) When is the maturity date of the note? (f) What is the annual interest rate on the note? (g) How long is the time between the date the note is issued and the maturity date? (h) How much is the interest due on the maturity date? (i) How much is the maturity value of the note? (2) Show how the April I transaction was recorded by O'Neill. (3) Show how the collection of the note receivable was recorded by O'Neill.

Explanation / Answer

1.

a.

“Klemme Farms” is the maker of the note

b.

“O’Neill Farm Equipment company” is the payee of the note

C.

April 1, 2014

D.

$60,000 is the face value of the note.

e.

October 1, 2014 (after 6 month of issuing the note)

f.

4%

g.

6 months

h.

interest due = 60000*4%*(6/12) = $1200

i.

Maturity value of the note = 60000+1200 = $61200

Pl. repost other parts of the questions for their proper answers.

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