Question

Spring Designs & Decorators issued a 120-day, 4% note for $60,000, dated April 13 to Jaffe Furniture Company on account. Assume a 360-day year when calculating interest. 

a. Determine the due date of the note. 

b. Determine the maturity value of the note 

c1. Journaline the entry to record the receipt of the note by Jaffe Furniture. 

c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank

Answer 1

A) Due date = April 13 + 120 days = August 11

B) Maturity value = 60,000+(60,000*4%*120/360) = 60,800

C)

1	Notes Receivable	60,000
	Accounts Receivable		60,000
2	Cash	60,800
	Notes Receivable		60,000
	Interest revenue		800