Asked by tommy lindberg on Jun 04, 2024
Verified
On March 9 Hill gave McGraw Company a 60-day 10% promissory note for $2500. Hill honors the note on May 9. Record the collection of the note and interest by McGraw assuming that no interest has been accrued.
Promissory Note
A financial document in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.
Accrued Interest
The interest that has accumulated on a debt over a period of time but has not yet been paid.
- Learn the procedure for registering transactions associated with notes receivable in accounting journals and assessing the interest revenue generated.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
May 9 Cash 2,542Interest Revenue ($2,500×10%×60/360) 42 Note Receivable 22,500\begin{array}{lll} \text {May 9 } & \text { Cash } &2,542\\& \text {Interest Revenue \( (\$ 2,500 \times 10 \% \times 60 / 360) \) } &&42\\ &\text { Note Receivable } &&22,500\end{array}May 9 Cash Interest Revenue ($2,500×10%×60/360) Note Receivable 2,5424222,500
Learning Objectives
- Learn the procedure for registering transactions associated with notes receivable in accounting journals and assessing the interest revenue generated.