Question

Spring Designs Decorators issued a 180-day, 9% note for $88,400, 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.

CHART OF ACCOUNTS

Jaffe Furniture Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Spring Designs Decorators
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	Owner, Capital
311	Owner, Drawing
312	Income Summary

	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 when calculating interest.

C. (1) Journalize the entry to record the receipt of the note by Jaffe Furniture. 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

C. (2) Journalize the entry to record the receipt of 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
	April 13 To April 30=			17
	May			31
	June			30
	July			31
	August			31
	september			30
	october			10
	total			180
	Due date of the note october 10
b)	Maturity value of the note
	88,400*9%*180/360
	3978
	Maturity value of the note =    88,400+3978
				92378	answer
c)	Journal Entries
	Date	Accounting titles & Explanations				Debit	Credit
	13-Apr	Note receivable				88,400
		Accounts receivable					88,400
	10-Oct	Cash				92,378
		interest revenue					3,978
		note receivable					88,400