Question

On July 9, Mifflin Company receives an $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on the maturity date assuming the maker pays in full, and no adjusting entries have been made related to the note?

Answer 1

Explanation:

Data given

Note receivable = $8,500

Interest rate = 8%

Days = 90

The Journal Entry is shown below:-

Cash Dr,                          $8,760

     To Interest Revenue                        $170

     To Notes receivable                        $8,500

(To record the Interest and Note received in cash)

Note :-

Interest revenue = $8,500 × 8% × 90 ÷ 360 days

= $170