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8 May, 05:28

On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?

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  1. 8 May, 05:55
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    Dr. CR.

    May 22

    Note Payable $7,500

    Interest Expense $150

    Cash $7650

    Explanation:

    At the time of maturity the principal amount and the tax on the note will be paid.

    Value of Note signed = $7,500

    Interest on Note = $7500 x 8% x 90 / 360 (assuming 360 days in a year)

    Interest on Note = $150

    Total Cash Payment = Principal + Interest

    Total Cash Payment = $7,500 + $150

    Total Cash Payment = $7,650
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Home » Business » On May 22, Jarrett Company borrows $7,500 from Fairmont Financing, signing a 90-day, 8%, $7,500 note. What is the journal entry needed to record the payment of the note by Jarrett Company on the maturity date?
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