Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers an

Question

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:

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 $4,000

d) Debit Notes Receivable $4,060; credit Sales $4,060

e) Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000

Explanation / Answer

Interest revenue = 4000*6%/360*90=$50 Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000 Option E is correct

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