Question

On August 2, Jun Co. receives a $6,400, 90-day, 12% note from customer Ryan Albany as payment on his $6,400 account.

1. Compute the maturity date for the above note.

a. October 29
b. October 30
c. October 31
d. November 1
e. November 2

2. Prepare Jun's journal entry for August 2

Answer 1

1.

c. October 31

2.

August 2

Dr. Note Receivable $6,400

Cr. Account Receivable $6,400

October 31

Dr. Cash $6,592

Cr. Note Receivable $6,400

Cr. Interest Income $192

Step-by-step explanation:

1. Counting 90 days after August 2,

29 days of August

30 days of September

31 days of October

Total Days = 29 + 30 + 31 = 90 days

The last days is October 31,

2.

Note is received from the customer, to reduce the account receivable value we will credit the account receivable account and note receivable is an asset for Jun co. so, we will debit the Note receivable account to record this note.

Interest amount = $6,400 x 12% x 3/12 = $192