Trade Receivables

Question 1

Cash proceeds from discounted notes receivable (interest bearing)

Answer 1

1. Face value N/R (principal) + Interest @ maturity (principal + Int. rate X total term i.e. 12/12) = Maturity Value (MV)
2. MV - Bank discount (financing fee %) (MV X discount rate X term remaining i.e. 6/12) = Net Cash Proceeds