Question

On april 12, hong company agrees to accept a 60-day, 10%, $4,500 note from indigo company to extend the due date on an overdue account. what is the journal entry that indigo company would make, when it records payment of the note on the maturity date? (use 360 days a year.)

Answer 1

Total interest due = [ $ 4,500 x 0.10 x (60/360) ] = $ 75