58/1 18.On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from custo

Question

58/1 18.On July 9, Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. Compute the amount due at maturity for the note. A. $8,628 B. $8,192 C. $8,613 D. $8,500 E. $8,670 59/1 19. On July 9. Mifflin Company receives a $8,500, 90-day, 8% note from customer Payton Summers as payment on account. What entry should be made on July 9 to record receipt of the note? A. Debit Accounts Receivable $8,500; credit Sales $8,500. B. Debit Notes Receivable $8,670; credit Sales $8,670 C. Debit Notes Receivable $8,500; credit Accounts Receivable $8,500. D. Debit Notes Receivable $8,500; credit Sales $8,500. E. Debit Notes Receivable $8,725: credit Interest Revenue $225; credit Accounts Receivable $8,500. 60,120. On July 9, Mifflin Company receives a $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? A. Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670 B. Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. C. Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. D. Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500 E. Debit Cash $8 500; credit Notes Receivable $8,500.

Explanation / Answer

58/118.) The Option E is correct . Amount due at the matuarity for note should include interest income at the rate of 8% for 90 days on the face value of note which is calcuated as follows:-

Interest = $8,500*8%*90/360 = $170 (Assuming 1 year = 360 days)

Amount due at the matuarity = $8,500+$170 = $8,670

59/119.) The Option C is correct. As Notes Receivable is Received from a customer in place of Accounts Receivable, therefore Debit the Notes Receivable by $8,500 and Credit the Account Receivable by $8,500.

60/120.) The Option B is correct. As interest computed is $170 and it should be recognised as Interest Revenue. So, the journal entry should be: Debit Cash by $8,670; Credit Interest revenue by $170; Credit Notes Receivable by $8,500.

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