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? Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. Debit Cash $8 500; credit Notes Receivable $8,500. Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500.

Question

Business

Mira Howard

8 October, 13:38

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? Debit Notes Receivable $8,500; debit Interest Receivable $170; credit Sales $8,670. Debit Cash $8,628; credit Interest Revenue $128; credit Notes Receivable $8,500. Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500. Debit Cash $8 500; credit Notes Receivable $8,500. Debit Cash $8,613; credit Interest Revenue $113; credit Notes Receivable $8,500.

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Answers (1)

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Tristin Cantu · Answer 1

To answer this question, let us calculate the necessary values.

Since interest given is for a whole year, then:

Interest rate/month = 0.08/12 = 0.0067

Credit interest revenue = Credit notes receivable * Interest rate/month * Duration of maturity in months

Credit interest revenue = $8,500 * 0.0067 * 3

Credit interest revenue = $170

Debit Cash = Credit notes receivable + Credit interest revenue

Debit Cash = $8,670

Therefore the answer is:

Debit Cash $8,670; credit Interest Revenue $170; credit Notes Receivable $8,500.