Question

Giorgio Italian Market bought $8,000 worth of merchandise from Food Suppliers and signed a 90-day, 10% promissory note for the $8,000. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

Answer 1

Answer and Explanation:

The journal entry is shown below:

Cash $8,200

To Notes receivable $8,000

To Interest revenue ($8,000 × 10% × 90 days ÷ 360 days) $200

(being the collection of notes is recorded)

For recording this we debited the cash as it increased the asset and credited the notes receivable and interest revenue as it decreased the assets and increased the revenue