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24 March, 03:53

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?

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  1. 24 March, 04:37
    0
    Dr Cash $8,670

    Cr Interest Revenue $170

    Cr Note Receivable $8,500

    Explanation:

    As we know that the interest given is for a year, so we should calculate the interest rate for a unit month, which is calculated as under:

    Interest per month = 0.08/12 = 0.0067

    Interest revenue = Note Value * Interest rate per month * Number of months

    Interest revenue = $8,500 * 0.0067 * 3

    Interest revenue = $170

    The double entry would be as under:

    Dr Cash $8,670 ... ($8,500 Note Value + $170 Interest Revenue)

    Cr Interest Revenue $170

    Cr Note Receivable $8,500
  2. 24 March, 06:19
    0
    July 9, promissory note received from Payton Summers

    Dr Notes receivable 8,500

    Cr Accounts receivable 8,500

    Explanation:

    Since the note is received as payment for an account receivable, you must increase notes payable (debit) and decrease accounts receivable (credit). This note is a current account that is due in 90 days, so it must be recorded at face value.
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