Question

Assume Nutricare company issued a 120-day,9% note for $1000 dated August 1,20Y7, to Bowden company for a $1000 overdue account.

Journalize entries for:

a. Issuance of the note

b. Payment of note at maturity

Answer 1

a.

Date	General Journal	Debit	Credit
August 1, 2017	Accounts payable - Bowden company	$1,000
	Note payable		$1,000
	( To record issuance for note)

b.

Date	General Journal	Debit	Credit
November 29, 2017	Note payable	$1,000
	Interest expense	$30
	Cash		$1,030
	( To record payment of note at maturity)

Working notes:

August	30 days
September	30 days
October	31 days
November	29 days
Total	120 days

Maturity date = November 29

Interest expense = Note payable x Interest revenue x 120/360

= 1,000 x 9% x 120/360

= $30

Kindly comment if you need further assistance.

Thanks‼!