Question

Giorgio Italian Market bought $8,800 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $8,800. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

Answer 1

Answer and Explanation:

The journal entry to record the collection is shown below:

Cash $8,932

To Interest Revenue $132 ($8,800 ×90 ÷ 360 × 6%)

To Notes Receivable $8,800

(being the collection is recorded)

Here cash is debited as it increased the assets, credited the interest revenue and note receivable as it increased the revenue but decreased the assets