Keesha Co. borrows $200,000 cash on December 1, 2017, by signing a 120-day, 11%

Question

Keesha Co. borrows $200,000 cash on December 1, 2017, by signing a 120-day, 11% note with a face value of $200,000. 1. On what date does this note mature? (Assume that February has 28 days) March 26, 2018. March 27, 2018. March 28, 2018. March 30, 2018. March 31, 2018. 2. & 3. What is the amount of interest expense in 2017 and 2018 from this note? (Use 360 days a year. Round final answers to the nearest whole dollar.) Total through maturityExpense 2017 Expense 2018 Interest Interest Principal Rate (%) Time Total interest

Explanation / Answer

# of days 1) December 30 January 31 February 28 March 31 Total days 120 Maturity date of the note = March 31, 2018 2) & 3) Total through Interest Interest maturity Expense Expense 2017 2018 Principal $   200,000 $   200,000 $    200,000 Rate % 11 11 11 Time 120/360 30/360 90/360 Total interest $        7,333 $        1,833 $         5,500 4) a) Cash 200000 Notes payable 200000 b) Interest expense 1833 Interest payable 1833 c) Interest expense 5500 Interest payable 1833 Notes payable 200000 Cash 207333

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