Question

Entries for Notes Receivable

Valley Designs issued a 90-day, 8% note for $90,000, dated April 19, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest.

a. Determine the due date of the note.
July 18

b. Determine the maturity value of the note.
$

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The due date is the date the note is to be paid.

Remember the interest rate is stated on an annual basis, while the term is expressed as days. Assume a 360 day year. The maturity value is the amount that must be paid at the due date of the note.

c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank.

	Notes Receivable
	Accounts Receivable-Valley Designs

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The account receivable must be removed from the books and the newly issued note receivable recorded.

c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.

	Cash
	Notes Receivable
	Interest Revenue

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At the due date, the company records the receipt of payment on the note.

Answer 1

a. Determine the due date of the note.
July 18

b. Determine the maturity value of the note.
$90000*8%*90/360 = 1800+90000 = $91800

c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank.

Apr 19	Notes Receivable	90000
	Accounts Receivable-Valley Designs		90000

c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.

July 18	Cash	91800
	Notes Receivable		90000
	Interest Revenue		1800