Question

1. Spring Designs & Decorators issued a 180-day, 4% note for $76,800, dated April 13 to Jaffe Furniture Company on account.

Required:

A.	Determine the due date of the note.
B.	Determine the maturity value of the note. Assume a 360-day year when calculating interest.
C.	Journalize the entries to record the following: (1) receipt of the note by Jaffe Furniture and (2) receipt of payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account titles.

2. The following selected transactions were completed by Fasteners Inc. Co., a supplier of buttons and zippers for clothing:

20Y3
Nov.	21	Received from McKenna Outer Wear Co., on account, a $54,000, 60-day, 8% note dated November 21 in settlement of a past due account.
Dec.	31	Recorded an adjusting entry for accrued interest on the note of November 21.
20Y4
Jan.	20	Received payment of note and interest from McKenna Outer Wear Co.

Journalize the entries to record the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year when calculating interest. Round answers to the nearest dollar amount.

Answer 1

A.	Due date of the note
	April 13 To April 30=			17
	May			31
	June			30
	July			31
	August			31
	september			30
	october			10
	total			180
	Due date of the note october 10
b)	Maturity value of the note
	76800*4%*180/360
	1536
	Maturity value of the note =    76800+1536
				78336	answer
c)	Journal Entries
	Date	Accounting titles & Explanations				Debit	Credit
	13-Apr	Note receivable				76,800
		Accounts receivable					76,800
	10-Oct	Cash				78,336
		interest revenue					1,536
		note receivable					76,800

Date	Account titles & Explanations					Debit	Credit
20Y3
21-Nov	Note receivable					54,000
	Accounts receivable-		McKenna				54,000
31-Dec	interest receivable					480
	interest income						480
	(54000*8%*40/360)
20Y4
20-Jan	Cash					54,720
	note receivable						54,000
	interest receivable						480
	interest income						240