Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account.

Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9, from a customer on account.

a. Determine the due date of the note.

b. Determine the maturity value of the note.

c. Journalize the entry to record the receipt of the payment of the note at maturity.

Answer:

a. The due date for the note is August 7, determined as follows: April.............................................................................. 21 days (30 – 9) May.............................................................................. 31 days June.............................................................................. 30 days July.............................................................................. 31 days August......................................................................... 7 days Total.............................................................................. 120 days b. $462,000 [$450,000 + ($450,000 × 8% × 120 ÷ 360)] c.  Aug. 7 Cash 462,000 Notes Receivable 450,000 Interest Revenue 12,000