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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Entries for notes receivable

Spring Designs & Decorators issued a 120-day, 4% note for $60,000, dated April 13 to Jaffe Furniture Company on account.

  1. a. Determine the due date of the note.
  2. b. Determine the maturity value of the note.
  3. c. journalize the entries to record the following: (1) receipt of me note by Jaffe Furniture and (2) receipt of payment of the note at maturity.

(a)

To determine

Note receivable:

Note receivable refers to a written promise received by the creditor from the debtor in formal, for the amounts to be settled within a stipulated period of time. This written promise is issued by a debtor or borrower to the lender or creditor. Notes receivable is an asset of a business. Notes receivable often used for the credit periods of more than 60 days.

Due date:

Due date is the maturity date on note, on due date the borrower is supposed to repay the face value of the note along with interest.

Interest on note:

Interest on note is the amount charged on the principal value of note for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.

To determine: The due date for the note issued on April 13.

Explanation

Determine the maturity date for the note issued on August 11.

The maturity date of the note is calculated as follows:

Particulars Days
Number of days from April 14 to 31 17 days
Number of days from May 1 to 31 31 days
Number of days from June 1 to 31 ...

(b)

To determine
The maturity value of the note.

(c)

To determine

To journalize: The entries to record the transactions of S Designs & Decorators.

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