Spring Designs & Decorators issued a 120-day, 4% note for $60,000, dated April 13 to Jaffe Furniture Company on account.
a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entries to record the following: (1) receipt of the note by Jaffe Furniture and (2) receipt of payment of the note at maturity.
Answer:
a. August 11 (17 + 31 + 30 + 31 + 11)
b. $60,800 [($60,000 × 4% × 120 ÷ 360) + $60,000]
c. (1) Apr. 13 Notes Receivable60,000
Accounts Rec.—Spring Designs &
Decorators60,000
(2) Aug. 11 Cash60,800
Notes Receivable60,000
Interest Revenue800