Question

qs 9 - 14 (algo) note receivable honored lo p4
on august 2, jun company receives a $7,000, 90 - day, 11.5% note from customer ryan albany as payment on his $7,000 account receivable.
prepare juns journal entry assuming the note is honored by the customer on october 31 of that same year.
note: do not round intermediate calculations. round your answers to nearest whole dollar value. use 360 days a year.
journal entry worksheet
record cash received on note plus interest.
enter debits before credits.
date general journal debit credit
october 31

Explanation:

Step1: Calculate the interest on the note

The formula for simple - interest is $I = P\times r\times t$, where $P$ is the principal amount, $r$ is the annual interest rate, and $t$ is the time in years. Here, $P=\$7000$, $r = 11.5\%=0.115$, and $t=\frac{90}{360}$.
$I=7000\times0.115\times\frac{90}{360}$
$I = 7000\times0.115\times0.25$
$I=\$201.25\approx\$201$

Step2: Determine the total amount received

The total amount $A$ received is the sum of the principal $P$ and the interest $I$.
$A = P+I$
$A=7000 + 201=\$7201$

Step3: Record the journal entry

The journal entry to record the cash received on the note plus interest:

Date	General Journal	Debit	Credit
	Notes Receivable		7000
	Interest Revenue		201

Answer:

Date	General Journal	Debit	Credit
	Notes Receivable		7000
	Interest Revenue		201