On July 9,Mifflin Company receives a $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on the maturity date assuming the maker pays in full?

Question

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The maturity value of the note includes the principal ($8,500) plus interest for 90 days at 8% per annum. The interest is calculated as $8,500 * 8% * (90/365) = $170. Therefore, the entry on the maturity date is to debit Cash for the total amount received ($8,670), credit Notes Receivable for the principal ($8,500), and credit Interest Revenue for the interest earned ($170).

On July 9,Mifflin Company Receives a $8,500,90-Day,8% Note from Customer