Question 1) OBX Mufflers accepted a five-month, 7.5% interest, $2,400 note from ABD Motors on June 1, 2008. The entire balance is payable at the note's maturity. What will be the total payment on October 31, 2008?
Question 2) George Masonry accepted a four-month, 10% interest, $1,800 note from Earth Tones on July 1, 2008. The entire balance is payable at the note's maturity.
Assume that George Masonry accrues interest on the note monthly. Prepare the October 31 journal entry to record the ultimate payment.
Question 3) Grant House Furnishings accepted a ten-month, 8% interest rate, $3,000 note from one of its customers on April 1, 2008.
How much interest will Grant House Furnishings accrue for the month of April?
Question 4) Derm Travel Agency accepted a four-month, 9% interest rate, $2,000 note from one of its customers on May 1, 2008. The entire balance is payable at the note's maturity.
Prepare the May 31 adjusting journal entry related to this note.
My answer
General Journal
Acct Title debit credit
Cash $2000
Notes receivable $2000
Interest receivable $45
Interest revenue $180