Notes Receivable

Notes Receivable - NotesReceivable

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Notes Receivable Companies classify the promissory notes they hold as notes receivable. A simple promissory  note: The face value of a note is called the  principal , which equals the initial amount of credit  provided. The  maker  of a note is the party who receives the credit and promises to pay the  note's holder. The maker classifies the note as a note payable. The  payee  is the party that  holds the note and receives payment from the maker when the note is due. The payee classifies  the note as a note receivable. Calculating interest . Notes generally specify an interest rate, which is used to determine how  much interest the maker of the note must pay in addition to the principal. Interest on short-term  notes is calculated according to the following formula:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
For example, interest on a four-month, 9%, $1,000 note equals $30. When a note's due date is expressed in days, the specified number of days is divided by 360 or 
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/11/2009 for the course BUED 110 taught by Professor Candaceransom during the Fall '09 term at Three Rivers CC.

Page1 / 4

Notes Receivable - NotesReceivable

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online