Question

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.) Multiple Choice Debit Cash $4,060; credit Notes Receivable $4,060 Debit Notes Receivable $4,060; credit Sales $4,060 Debit Notes Receivable $4,000; credit Cash $4,000 Debit Cash $4,000; debit Interest Receivable $60; credit Sales $4,060 Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000

Answer 1

Answer:

Answer

Verified by Expert

Answered by

peterdaly

peterdaly

rosariomividaa3

+1

rosariomividaa3 and 1 more users found this answer helpful

The maturity date should show $4000 plus the 6% interest of $240 or $4240 because the market needed the 90 days probably to sell the merchandise and thus be able to pay for the goods and with adequate sales price of the goods they should also be able to pay the interest and still make a profit.

Explanation:

Answer 2

Answer:

Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000

Explanation:

Since the question is to record the collection on the maturity date, we must first find the interest.

Amount x Rate x Time = Interest (use 360 "banker's rule")

$4,000 x 6% x 90 / 360 = 60

Maturity date is the Principal Amount + Interest = $4,060