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19 December, 16:59

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:

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  1. 19 December, 17:34
    0
    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.
  2. 19 December, 18:20
    0
    Given:

    4,000 worth of goods

    signed a 90-day, 6% promissory note for the $4,000

    The 6% would be annual interest rate. So we need to solve for the corresponding interest rate of the 90-day period.

    6% / 360 = 0.0166

    0.0166% x 90 = 1.5%

    4,000 * 1.5% = 60 interest income

    Sales recorded by Foods Supplier:

    Debit Credit

    Notes Receivable 4,000

    Sales Revenue 4,000

    Payment made by Giorgio Italian Market will be recorded by Food Supplier as the following:

    Debit Credit

    Cash 4,060

    Notes Receivable 4,000

    Interest Income 60
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