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On June 1, 2018, Dirty Harry Co. borrowed cash by issuing a 6-month noninterest-bearing note with a maturity value of $500,000 and a discount rate of 6%. Assuming straight-line amortization of the discount, what is the carrying value of the note as of September 30, 2018? A) $525,000. B) $475,000. C) $495,000. D) $300,000.

Respuesta :

Answer:

The answer is C. $495,000.

Explanation:

the Face amount =  $500,000

Discount =   $500,000 × 0.06 × 6/12=15,000

Carrying value as at 6/1/2013 =    485,000              

Discount amortization (4/6)  = 10,000

Carrying value, 9/30/2013 = $495,000