Question

Prefix Supply Company received a 60-day, 4% note for $46,000 dated July 12 from a customer on account.

	Required:
	a. Determine the due date of the note.
	b. Determine the maturity value of the note. Assume a 360-day 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.

CHART OF ACCOUNTS

Prefix Supply Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
129	Allowance for Doubtful Accounts
132	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Sales Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Store Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
530	Office Salaries Expense
531	Rent Expense
532	Depreciation Expense-Office Equipment
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

a. Determine the due date of the note.

b. Determine the maturity value of the note. Assume a 360-day year. (Note: Round computations to the nearest whole dollar.)

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.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3

Answer 1

(a)
	Due date of the Note    = 19 days in July + 31 days in August                  + 10 Days in September	September 10
(b)	Maturity Value of Note        = Face Value   + Interest         = $ 46,000 + ( $ 46,000 x 4% x 60/360)	$ 46,000 + $ 307	$ 46,307
(c )
Date	Account Titles and Explanation	Debit	Credit
September 10	Cash	$ 46,307
	Notes receivable		$ 46,000
	Interest revenue		$ 307
	(To record receipt of payment of Note at Maturity)