# On August 2, 2011, JLK Co. receives...?

On August 2, 2011, JLK Co. recieves a \$5,500, 90-day, 12% note from customer Tom Menke as payment on his \$9000 account.

(1) Compute the maturity date for this note.

(2) Prepare JLK's journal entry for August, 2.

Update:

Part 2: Refer to the information above and prepare the journal entry assuming the note is honored by the customer on October 31, 2011.

Relevance
• JKRB
Lv 7
8 years ago

(1) Compute the maturity date for this note.

August 29 days remaining

September 30 days

October 31 days

= 90 days

Maturity date is October 31

(2) Prepare JLK's journal entry for August, 2.

Dr Notes Receivable 5,500

Cr Accounts Receivable 5,500

Part 2: Refer to the information above and prepare the journal entry assuming the note is honored by the customer on October 31, 2011.

*Note: A 360 day year is normally used for these types of problems

5,500 x 12% x 90/360 = \$165 interest revenue

Dr Cash 5,665

Cr Notes Receivable 5,500

Cr Interest Revenue 165

Source(s): Accounting Fan