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Discount Loan

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On March 15, 2008, the energy company obtained a 9 month working capital loan from the bank. The face amount of the note signed by the treasurer was $300,000. The interest rate charged by the bank was 10%. The bank made the loan on a discount basis.

(1.) What's the amount of loan proceeds made available to the energy company?
(2.) What's the interest expense related to this loan during the 6 months ended June 30, 2008?
(3.) What's the current liability related to this loan to be shown in the June 30, 2008 balance sheet?

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Solution Summary

The solution explains the calculations relating to a discount loan. The solution answers questions regarding the amount of loans, interest expense, and current liability methods. Step by step calculations are provided.

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Problem: On March 15, 2008, the energy company obtained a 9 month working capital loan from the bank. The face amount of the note signed by the treasurer was $300,000. The interest rate charged by the bank was 10%. The bank made the loan on a discount basis.

Solution:
(1.) What's the amount of loan proceeds ...

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