Details of Notes Receivable and Related Entries Gen-X Ads Co. produces advertising videos. During the current fiscal year, Gen-X Ads Co. received the following notes:
Date Face Amount Term Interest Rate
1. Jan. 14 $33,000 30 days 4 %
2. Mar. 9 60,000 45 days 7
3. July 12 48,000 90 days 5
4. Aug. 23 16,000 75 days 6
5. Nov. 15 36,000 60 days 8
6. Dec. 10 24,000 60 days 6
Required:
Assume 360 days in a year.
1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.
Note (a) Due Date (b) Interest Due at Maturity
(1) Feb. 13 $
(2) Apr. 23
(3) Oct. 10
(4) Nov. 6
(5) Jan. 14
(6) Feb. 8
Count the number of days in each month until the total number of days is reached for the term of the note and this will be the due date. Interest is not charged on the first day of the note.
Typically, the maker of a dishonored note fails to pay the note on the due date. A company that holds a dishonored note transfers the face amount of the note plus any interest due back to an accounts receivable account. Interest revenue is not dependent on receiving the interest at this point.
Cash received will include the maturity value of the note.