Giorgio Italian Market bought $5,600 worth of merchandise from Food Suppliers and signed a 90-day, 10% promissory note for the $5,600. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

Question

Sullivan Nicholson

Business

22 July, 08:58

Giorgio Italian Market bought $5,600 worth of merchandise from Food Suppliers and signed a 90-day, 10% promissory note for the $5,600. Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

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Answers (1)

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Edwin Petersen · Answer 1

Answer: $5,740

The amount to be recorded by the food supplier after 90 days is $5,740

Explanation:

By using the formula

A = p + prt

A = future amount (amount due on a debt)

p = principal / present value=$5,600

r = interest rate = 10% = 0.1

t = time in year. Convert 90days to Yr ... (60/360) = 0.25yrs

A = p+prt = p (1 + rt)

A = 5600 [1 + (0.1 * 0.25) ]

A = 5600 [1 + 0.025]

A = 5600 (1.025)

A = $5,740.

The amount that would be returned after 90 days at 10% interest rate is $5,740.