Giorgio italian market bought $4,000 worth of merchandise from food suppliers and signed a 90-day, 6% promissory note for the $4,000. food supplier's journal entry to record the collection on the maturity date is:

Question

Conner Joyce

Business

27 August, 01:20

Giorgio italian market bought $4,000 worth of merchandise from food suppliers and signed a 90-day, 6% promissory note for the $4,000. food supplier's journal entry to record the collection on the maturity date is:

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Answers (2)

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Jayden David · Answer 1

Given:

4,000 worth of goods

signed a 90-day, 6% promissory note for the $4,000

The 6% would be annual interest rate. So we need to solve for the corresponding interest rate of the 90-day period.

6% / 360 = 0.0166

0.0166% x 90 = 1.5%

4,000 * 1.5% = 60 interest income

Sales recorded by Foods Supplier:

Debit Credit

Notes Receivable 4,000

Sales Revenue 4,000

Payment made by Giorgio Italian Market will be recorded by Food Supplier as the following:

Debit Credit

Cash 4,060

Notes Receivable 4,000

Interest Income 60

Dusty · Answer 2

The maturity date should show $4000 plus the 6% interest of $240 or $4240 because the market needed the 90 days probably to sell the merchandise and thus be able to pay for the goods and with adequate sales price of the goods they should also be able to pay the interest and still make a profit.