r. Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co.

Question

r. Potts issued a 90-day, 7% note for $200,000, dated February 3rd to Valley Co. on account. (Assume a 360-day year when calculating interest.)

a. Determine the due date of the note.
SelectFebruary 3 May 4 May 11 April 30

b. Determine the interest.
$

c. Determine the maturity value of the note.
$

d. Journalize the entry to record the issuance of the note by Potts on Feb. 3.

e. Journalize the entry to record the receipt of payment of the note at maturity by Valley Co. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

Explanation / Answer

a. The due date of the note : May 4

b. Interest = $200000*7%*90/360 = $3500

c. Maturity value of the note = $200000+$3500=$203,500

d. Journal Entry in books of Potts.

e. Journal Entry

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