Question

QS 7-12 Note receivable honored LO P4 On August 2, Jun Co. receives a $7,100, 90-day, 12.0% note from customer Ryan Albany as payment on his $7,100 account receivable. Prepare Jun's journal entry assuming the note is honored by the customer on October 31 of that same year. (Do not round intermediate calculations. Round your answers to nearest whole dollar value. Use 360 days a year.)

Answer 1

Answer: See explanation

Explanation:

Firstly, the interest revenue will be calculated as:

= 7,100 × 12% × 90/360

= 7100 × 0.12 × 0.25

= $213

Therefore, Jun's journal entry assuming the note is honored by the customer on October 31 will be:

Debit: Cash = $7313

Credit: Notes receivable = $7100

Credit: Interest revenue = $213.