Question

Sylvestor Systems borrows $99.000 cash on May 15 by signing a 90-day, 4%, $99,000 note. 

1. On what date does this note mature? 

2-a. Prepare the entry to record issuance of the note. 

2-b. First, complete the table below to calculate the interest expense at maturity. Use those calculated values to prepare your entry to record payment of the note at maturity.

Answer 1

SOLUTION 1:
	Date of issue of note	May , 15
	Period of Note	90 Days
	Balane daus in May	16	Days
	Days in June	30	Days
	Days in July	31	Days
	Balance Days in August	13	Days
	Total	90	Days
	Date of Mature of Note = 13th August
SOLUTION : 2 (A)
Journal Entries
Date	Account Title and explanation	Debit	Credit
May, 15	Cash	$                      99,000
	Note Payable		$           99,000
SOLUTION : 2 (B)
	Principal	$                      99,000
	Rate	4%
	Time	90 Days
	Total Interest ($ 99,000 X 4 % ) X 90 Days / 360 Days	$                            660
SOLUTION : 2 (B)
Journal Entries
Date	Account Title and explanation	Debit	Credit
Aug, 13	Note Payable	$                      99,000
	Interest Expenses	$                            660
	Cash		$           99,660

Answer 2

you made a mistake on the total interest because (99,000 * 4% = 3960 * 90 = 356,400/360 days =  990. so the answe is wrong