Question

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

Answer 1

Answer:

The journal entry for the following would be:

Explanation:

Journal entry in the books of Food supplier on the maturity date of the note

Cash A/c...........................Dr     $4,060

  To Interest Revenue A/c..........Cr   $60

   To Note Receivable A/c...........Cr   $4,000

Working Note:

Interest Revenue = Amount of goods sold × 6% note × Number of days

                             = $4,000 × 6% × 90 / 360

                             = $240 × 90 / 360

                             = $60