<u>Journal entry for the collection of the note at its maturity:</u>
It is given that the company lends $40,000 on august 1, 2014, accepting a 9-month, 12% interest note. And it has accrued interest at its December 31, 2014 year-end, so Interest Receivable shall be 40,000*12%*5/12 = $2,000. The journal entry to record the collection of the note and interest at its maturity date 30th April 2015 shall be as follows:
Account titles Debit Credit
Cash $43,600
Interest receivable $2,000
Interest Revenue $1,600
Notes Receivable $40,000
(Being notes receivable collected on its maturity date)
(Note: The interest revenue is calculated for the period of Jan. 1, 2015 to April 30, 2015 = 40,000*12%*4/12 = $1,600)
