Question

Chapter 8 Practice Problems Problem #11 - Notes Receivable ABC Company had a 90-day, 4.5% note for $600,000, dated January 10 from a customer on account. 1) Determine the maturity date for the note. 2) Determine the maturity value of the note. 3) Prepare journal entries for the receipt of the note on January 10, and the receipt of the cash on the maturity date of the note. Problem #12 - Notes Receivable ABC Company had a 180-day, 5% note for $950,000, dated April 3 from a customer on account. 1) Determine the maturity date for the note. 2) Determine the maturity value of the note. 3) Prepare journal entries for the receipt of the note on April 3, and the receipt of the cash on the maturity date of the note,

Answer 1

11.

A) Maturity date = January 10 + 90 days

= April 9

B) Maturity value of the note

= 600,000 + (600,000*4.5%*90/360)

= 606,750

C)

DATE	GENERAL JOURNAL	DEBIT	CREDIT
Jan 10	Notes Receivable	600,000
	Accounts Receivable		600,000
Apr 8	Cash	606,750
	Notes Receivable		600,000
	Interest revenue		6,750

.

.

.

12.

A) Maturity date = April 3 + 180 days

= September 30

B) Maturity value of the note

= 950,000 + (950,000*5%*180/360)

= 973,750

C)

DATE	GENERAL JOURNAL	DEBIT	CREDIT
Apr 3	Notes Receivable	950,000
	Accounts Receivable		950,000
Sep 30	Cash	973,750
	Notes Receivable		950,000
	Interest revenue		23,750