Question

On april 12, hong company agrees to accept a 60-day, 9%, $7,200 note from indigo company to extend the due date on an overdue account. what is the journal entry needed to record the payment of the note by indigo company on the maturity date

Answer 1

the journal entry needed to record the payment of the note by indigo company on the maturity date was given below.
Debit Notes Payable:$7,200;
Interest rate is 9 %.
so for 6 months Interest =( 7200*9)/200
debit Interest Expense=$324;
credit Cash = Debit Notes Payable +debit Interest Expense
credit Cash = $7,524