EX 9-20 Entries for notes receivable

Doe Creek Interior Decorators issued a 120-day, 7% note for $150,000, dated February 18, 2014, to La Fleur Furniture Company on account.

a. Determine the due date of the note.
b. Determine the maturity value of the note.
c. Journalize the entries to record the following: (1) receipt of the note by La Fleur

Furniture and (2) receipt of payment of the note at maturity.


Answer:

a. June 18 (10 + 31 + 30 + 31 + 18)
b. $153,500 [($150,000 × 7% × 120/360) + $150,000] 
c. (1) Notes Receivable 150,000
Accounts Rec.—Dry Creek Interior Decorators 150,000
Cash 153,500
(2) Notes Receivable 150,000
Interest Revenue 3,500