Question

Lone Star Company received a 90-day, 6% note for $80,000, dated March 12 from a customer on account. (Assume a 360-day year when calculating interest.)

(a)	Determine the due date of the note.
(b)	Determine the maturity value of the note.
(c)	Journalize the entry to record the receipt of the payment of the note at maturity.

Answer 1

Answer-a)- The due date of the note= 10 June.

Explanation- Due date of note = 10 June

19 days = March

30 days = April

31 days = May

10 days = June (ie- 10 June)

b)-The maturity value of the note = Face amount+ Interest amount

= $80000+[($80000*6%)*90 days/360 days}

= $80000+$1200

= $81200

c)- The entry to record the receipt of the payment of the note at maturity=

Date	ACCOUNTS TITLES & EXPLANATION	DEBIT	CREDIT
		$	$
10 June	Cash	81200
	Notes Receivable		80000
	Interest Revenue		1200
	(Being entry recorded)