Question

Lundquist Company received a 60-day, 9% note for $28,000, dated July 23, from a customer on account. Required: a. Determine the due date of the note. b. Determine the maturity value of the note. Assume 360 days in a year. 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:

a. Sep 10

b. $21,823

c. $21,500

Explanation:

a) Due date of the note

July 13 to 31 = 19 days

Aug 1 to 31 = 31 days

Sep 1 to Sep 10 = 10 days

due date is Sep 10

b) Maturity value of the note

$ 21500 + $ 21500*9%*60/360

= $ 21823

c) Journal entry

Cash debit $ 21823

interest recieved credit $323

Notes Receivable credit $ 21500

Answer 2

Answer:

A. SEPTEMBER 10

B.$28,420

C.Dr Cash $28,420.00

Cr Notes Receivable $28,000

Cr Interest Revenue $420.00

Explanation:

A.

September 10

B.

[$28,000 + ($28,000x 9% x 60 ÷ 360)

$28,000+$420

=$28,420

C.

Sept 10

Dr Cash $28,420.00

Cr Notes Receivable $28,000

Cr Interest Revenue $420.00