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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

Note receivable

Lundquist Company received a 60-day, 9% note for $28,000, dated July 23, from a customer on account.

  1. a. Determine the due date of the note.
  2. b. Determine the maturity value of the note.
  3. c. Journalize the entry to record the receipt of the 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.

To determine: The due date for the note received on July 23.

Explanation

The maturity date of the note is calculated as follows:

Particulars Days
Number of days from July 24 to 31 8 days
Number of days from August 1 to 31 31 days
...

(b)

To determine
The maturity value of the note.

(c)

To determine

To journalize: The entry to record the receipt of the payment of the note at maturity.

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