Question

Spring Designs & Decorators issued a 180-day, 7% note for $65,400, dated April 13 to Jaffe Furniture Company on account.

Entries for notes receivable

A. Determine the due date of the note.

B. Determine the maturity value of the note. Assume a 360-day year when calculating interest.

C. (1) Journalize the entry to record the receipt of the note by Jaffe Furniture. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

C. (2) Journalize the entry to record the receipt of payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

Required:

A.	Determine the due date of the note.
B.	Determine the maturity value of the note. Assume a 360-day year when calculating interest.
C.	Journalize the entries to record the following: (1) receipt of the note by Jaffe Furniture and (2) receipt of payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

Jaffe Furniture Company

General Ledger

ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Spring Designs & Decorators 129 Allowance for Doubtful Accounts 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Owner, Capital 311 Owner, Drawing 312 Income Summary

REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Store Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

Answer 1

Answer A:

Due date will be 180 days from April 13 = October 10

Due date is October 10

Answer B:

Interest at maturity = $65,400 * 7% * 180 / 360 = $2289

Maturity value = 65400 + 2289 = $67,689

Maturity value = $67,689

Answer C (1):

Answer C (2):