Question
In: Accounting
On May 14, Bentley Company received a $75,000, 8%, 90 day note from a customer for...
- On May 14, Bentley Company received a $75,000, 8%, 90 day note from a
customer for the sale of merchandise.
What is the maturity date of this note?
What is the maturity value of this note?
Record the journal entries on May 14 and the maturity date for Bentley
Company, the payee on the note.
May 14:
Maturity Date:
Solutions
Expert Solution
Information Given -
On May 14, Bentley Company received a $75000, 8%, 90 day note from a customer for the sale of merchandise.
.
( 1 ) -- What is the maturity date of this note?
Answer -
Calculation of Maturity date -
| Period | Number of Days | Cumulative Days |
| May 14 to May 31 | 31-14 = 17 | 17 |
| June 1 to June 30 | 30 |
47 [17+30] |
| July 1 to July 31 | 31 |
78 [47+31] |
| August 12 | 12 |
90 [78+12] |
|
Hence, Maturity date = August 12. |
||
.
( 2 ) -- What is the maturity value of this note?
Answer -
Maturity value = Notes Receivable amount + Interest Revenue
= $75000 + ($75000 * 8% * 90/360)
= $75000 + $1500
= $76500.
.
( 3 ) -- Record the journal entries on May 14 and the maturity date.
Answer -
Journal of Bentley Company
| Date | Account Titles and Explanation | Debit ($) | Credit ($) |
| May 14 |
Notes Receivable Sales (To record sale of merchandise) |
75000 - |
- 75000 |
| August 12 |
Cash Notes Receivable [Given in question] Interest Revenue [$75000*8%*90/360] (To record cash received against note on maturity) |
76500 - - |
- 75000 1500 |
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