Question

Jun Company receives a $6,500, 90-day, 14.5% note from customer Ryan Albany as payment on his $6,500 account receivable. What is the principal amount of the note?

a) $6,500
b) $9,350
c) $7,425
d) $8,750

Answer 1

The principal amount of the note that Jun Company receives from Ryan Albany is the original amount before interest, which is $6,500.

Step-by-step explanation:

The question asked regards the principal amount of a note receivable. In this scenario, Jun Company receives a $6,500, 90-day, 14.5% note from customer Ryan Albany. The principal amount of a note is the original amount of money lent or owed before interest has been added. According to the given details, the principal amount is directly stated as $6,500, which means that no calculations are required to find the principal because it does not change with the addition of interest over time. The correct answer to the question is a) $6,500.