Question

Guzman Company received a 60-day, 6% note for $28,000 dated July 12 from a customer on account. Required: a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entry to record the receipt of the payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer and Explanation:

a. Since Note is 60 days due

Due date

Jul 19 days

Aug 31 days

Sep 10. 10 days

Total 60 days

Hence, the Due date is Sep 10

b Here we assume 365 days in a year

Now

Interets on Note = $28,000 × 6% × 60 ÷ 365

= $276.16

And, finally Maturity value is

= $28,000 + $276.16

= $28,276.16

c. The journal entry is

Sep 10. Cash $28,276.16

To Note Receivable $28,000.00

To Interest Revenue $276.16

(Being the cash received is recorded)