Maturity value the principal interest that is due on

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Unformatted text preview: the final payment on the note is due. Maturity value: The Principal + Interest that is due on the maturity date. • • Can be considered a current asset (if note will be collected within a year) or non-current asset (if maturity date is greater than one year). • Calculate interest (assuming simple interest) by: Principal x Interest Rate x Time (PxRxT) • Must accrue interest on the note (for proper matching of expenses) Suppose Cainas Cookies loans a customer $10,000, accepting a 180-day, 6% note, on 10/1/13. What journal entry should Cainas Cookies record? 10/1/13: Debit: Notes Receivable $10,000 Cash Credit: $10,000 Assuming no adjusting entries have been made as of 12/31, what adjusting entry is required on Cainas Cookies' books? 51 12/31/13: Debit: Interest Receivable 5150 Credit: Interest Revenue $150 (Principal x Rate x Time = $10,000 x 6% x 3/12) When the note matures, what entry must the comp...
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This note was uploaded on 01/23/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.

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