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: (Use 360 days a year.)

A) Debit Cash $4,060; credit Notes Receivable $4,060
B) Debit Notes Receivable $4,000; credit Cash $4,000
C) Debit Cash $4,000; debit Interest Receivable $60; credit Sales $4,060
D) Debit Notes Receivable $4,060; credit Sales $4,060
E) Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000

Question

Tchuknequa Baymon · Accepted Answer

Final Answer : E, Explanation :  The correct journal entry includes debiting Cash for the total amount received ($4,060), which is the principal plus interest, and crediting Notes Receivable for the principal amount ($4,000) and Interest Revenue for the interest earned ($60). The interest is calculated as $4,000 * 6% * (90/360) = $60.

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