Question

On May 17, Bruno Olive Co. accepted a $6,500, 8%, 90-day note from a customer. On June 11, the note was discounted at 10%. At maturity date, the note was dishonored and the bank charged a $25 protest fee. The amount that Bruno Olive Co. would debit to Notes Receivable Dishonored is___________

Answer 1

To find the amount that Bruno Olive Co. would debit to Notes Receivable Dishonored, calculate the maturity value of the note and subtract the protest fee.

Step-by-step explanation:

To determine the amount that Bruno Olive Co. would debit to Notes Receivable Dishonored, we need to calculate the maturity value of the note and subtract the protest fee.

First, calculate the maturity value of the note by adding the discount to the face value of the note. The discount is calculated as: Face Value * Interest Rate * Time. In this case, the discount would be $6,500 * 8% * (90/360) = $130.

Next, calculate the maturity value by adding the face value and the discount: $6,500 + $130 = $6,630.

Finally, subtract the protest fee from the maturity value to find the amount that Bruno Olive Co. would debit: $6,630 - $25 = $6,605.