**Valley Designs Note Issuance Exercise**Valley Designs issued a 90-day, 12% note for $36,000, dated April 15, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest.**a. Due Date Determination**- Determine the due date of the note: **July 14** (Correct)**b. Maturity Value Calculation**- Determine the maturity value of the note: Entered value was **$36,720** (Incorrect)**c1. Journalizing Note Receipt**- Journalize the entry to record the receipt of the note by Bork Furniture: - **Notes Receivable**: **$36,000** (Correct) - **Accounts Receivable-Valley Designs**: **$36,000** (Correct)**c2. Journalizing Payment Receipt at Maturity**- Journalize the entry to record the receipt of payment of the note at maturity: - **Cash**: Entered value was **$36,720** (Incorrect) - **Notes Receivable**: **$36,000** (Correct) - **Interest Revenue**: Entered value was **$720** (Incorrect)**Explanation:**1. **Interest Calculation:** - Interest = Principal × Rate × Time - Interest = $36,000 × 12% × (90 ÷ 360) = $1,080 2. **Maturity Value:** - Maturity Value = Principal + Interest - Maturity Value = $36,000 + $1,080 = $37,0803. **Correct Journal Entry for Payment at Maturity:** - **Cash**: $37,080 - **Notes Receivable**: $36,000 - **Interest Revenue**: $1,080The entered values for the maturity value and payment receipt need adjustment to reflect the correct interest revenue and cash received values.

Maturity Value of Note will be Principal Amount and Interest on Note Interest = Principal * Interest…

Valley Designs issued a 90-day, 12% note for $36,000, dated April 15, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest. a. Determine the due date of the note. July 14 V b. Determine the maturity value of the note. 36,720 c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank. Notes Receivable v 36,000 Accounts Receivable-Valley Designs 36,000 c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.

Valley Designs issued a 90-day, 12% note for $36,000, dated April 15, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest. a. Determine the due date of the note. July 14 V b. Determine the maturity value of the note. 36,720 c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank. Notes Receivable v 36,000 Accounts Receivable-Valley Designs 36,000 c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for Notes Receivable Valley Designs issued a 90-day, 8% note for $78,000, dated April 22, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest. a. Determine the due date of the note. b. Determine the maturity value of the note. c1. Journalize the entry to record the receipt of the note by Bork Furniture. If an amount box does not require an entry, leave it blank. c2. Journalize the entry to record the receipt of payment of the note at maturity. If an amount box does not require an entry, leave it blank.
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