Question

Giorgio Italian Market bought $6,600 worth of merchandise from Food Suppliers and signed a 90-day, 8% promissory note for the $6,600. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.) Multiple Choice Debit Cash $6,732; credit Notes Receivable $6,732 Debit Notes Receivable $6,600; credit Cash $6,600 Debit Cash $6,600; debit Interest Receivable $132; credit Sales $6,732

Answer 1

Debit Cash $6,732; Credit Interest Revenue $132; Credit Notes Receivable $6,600

Step-by-step explanation:

Based on the information given the appropiate journal entry to record the collection on the maturity date is:

Debit Cash $6,732

Credit Interest Revenue $132

Credit Notes Receivable $6,600

Calculated as:

Interest = $6,600 × 0.08 × 90/360

Interest= $132

Maturity Value = $6,600 + $132

Maturity Value = $6,732