Doe Creek Interior Decorators issued a 120-day, 7% note for $150,000, dated February 18, 2014

Doe Creek Interior Decorators issued a 120-day, 7% note for $150,000, dated February 18, 2014, to La Fleur Furniture Company on account.

a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entries to record the following: (1) receipt of the note by La Fleur

Furniture and (2) receipt of payment of the note at maturity.


Answer:










a. June 18 (10 + 31 + 30 + 31 + 18)
b. $153,500 [($150,000 × 7% × 120/360) + $150,000] 
c. (1) Notes Receivable 150,000
Accounts Rec.—Dry Creek Interior Decorators 150,000
Cash 153,500
(2) Notes Receivable 150,000
Interest Revenue 3,500




Determine the due date and the amount of interest due at maturity on the following notes dated in 2014:


Date of Note Face Amount Interest Rate Term of Note
a. January 22 $55,000 8% 90 days
b. March 9 36,000 5 60 days
c. June 15 78,000 4 45 days
d. September 4 13,800 7 60 days
e. October 1 58,000 6 120 days




Answer:



Due Date
a. Apr. 22
Interest
$1,100 [$55,000 × 0.08 × (90/360)]
b. May 8 300 [$36,000 × 0.05 × (60/360)]
c. July 30 390 [$78,000 × 0.04 × (45/360)]
d. Nov. 3 161 [$13,800 × 0.07 × (60/360)]
e. Jan. 29 1,160 [$58,000 × 0.06 × (120/360)]