Question

Spring Designs Decorators issued a 180-day, 6% 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.

Answer 1

Solution:
A.	The due date of the note	October 10
Working Notes:
	The due date of the note
	a 180-day, 6% note for $76,800, dated April 13
	The due date for the note is calculated 180th day excluding April 13 means
	April	17	days
	May	31
	June	30
	July	31
	August	31
	September	30
	October	10
		180	days
	The due date of the note is 10th of October 2016
B.	The maturity value of the note =$79,104
Working Notes:
	The maturity value of the note = Value of Note x(1+ Note rate x (Period of Note/360 days))
		=$76,800 x (1+ 0.06x(180/360))
		=$76,800 x 1.03
		=$79,104
C.	Journalize the entries
(1) Receipt of the note by Jaffe Furniture
Date	General Journal	Debit	Credit
April 13	Notes Receivable	$76,800
	Accounts Receivable		$76,800
(2) Receipt of payment of the note at maturity
Date	General Journal	Debit	Credit
October 10	Cash	$79,104
	Notes Receivable		$76,800
	Interest Revenue		$2,304
Notes:	Interest Revenue = Face value of Note x Note rate x Note period /360 days
		=$76,800 x 6% x 180/360
		=$2,304
	Cash will received is the maturity value of the note
	Notes Receivable is the is Note face value
Noted that you have not provided Chart of Accounts, hence for exact wording please refer that yourself.
Please feel free to ask if anything about above solution in comment section of the question.