Question

Sylvestor Systems borrows $120,000 cash on May 15 by signing a 30-day, 6%, $120,000 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.

- Record the issuance of the note

Interest at Maturity

- Principal

- Rate%

- Time

- Toal Interest

- Record the payment of the note at maturity

Answer 1

1. Maturity date = June 14

2.a

Date	General Journal	Debit	Credit
May 15	Cash	$120,000
	Note Payable		$120,000

2. b

Principal	$120,000
Rate	6%
Time	30 days
Total interest	120,000 x 6% x 30/365 = $592

Date	General Journal	Debit	Credit
June 14	Note payable	$120,000
	Interest expense	$592
	Cash		$120,592

Note: If it is assumed that year has 360 days, interest calculation will change as under:

Interest = 120,000 x 6% x 30/360

= $600

Kindly comment if you need further assistance. Thanks