Question

Spring Designs & Decorators issued a 180-day, 6% note for $76,800, dated April 13 to Jaffe...

Spring Designs & Decorators issued a 180-day, 6% note for $76,800, dated April 13 to Jaffe Furniture Company on account.

Required:

A. Determine the due date of the note.
B. Determine the maturity value of the note. Assume a 360-day year when calculating interest.
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. Refer to the Chart of Accounts for exact wording of account titles.

Homework Answers

Answer #1

A. Due date = 13th April + 180 days = 10th October

180 days = 17 days of april + 31 may + 30 june + 31 july + 31 august + 30 sep + 10 october

B. Maturity value = Note value + Interest

Interest = (76,800 * 6%) / 2

= $2,304

  Maturity value = $76,800 + $2,304

= $79,104

C. a. Receipt of note

April 13     Notes Receivable 76800

Accounts receivable - Spring designs and decorator 76800

b. Receipt of payment of note

October 10   Cash 79104

   Interest revenue 2304

   Notes Receivable 76800

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