Journalizing notes receivable transactions [15-20 min]
A company received the following notes during 2012. The notes were discounted on the dates and at the rates indicated:
Note | Date | Principal Amount | Interest Rate | Term | Date Discounted | Discount Rate |
(1) | Jun 1 | $ 13,000 | 10% | 120 days | Aug 15 | 13% |
(2) | Aug 19 | 10,000 | 9% | 90 days | Aug 30 | 11% |
(3) | Jul 15 | 4,000 | 7% | 6 months | Oct 15 | 9% |
Requirements
Identify each note by number, compute interest using a 360-day year, and round all interest amounts to the nearest dollar. Explanations are not required.
1. Determine the due date and maturity value of each note.
2. Determine the discount and proceeds from the sale (discounting) of each note.
3. Journalize the discounting of notes (1) and (2).
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