Drill 24 d1 calculating maturity date the time

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Drill 24-D1 Calculating maturity date The time between the date a note is issued and the date a note is due may be expressed in either years, months, or days. When the time of a note is stated in months, the maturity date is calculated by counting the number of months from the date of issuance. A six-month note dated April 11 would be due on October 11.
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4 When the time of a note is expressed in days, the maturity date is calculated by counting the exact number of days. The date the note is written is not counted, but the maturity date is counted. Find the number of days remaining in the month the note was written. Add the days in the following months until the total equals the required number of days. A 60-day note dated March 3 is due on May 2. March 3 - March 31 28 days (31 - 3 = 28) April 1 - April 30 30 days May 1 - May 2 2 days (Maturity date: May 2) 60 days To calculate a maturity date, remember that April, June, September, and November have 30 days; all other months, except February, have 31 days. Drills 24-D2 and 24-D3 NOTES PAYABLE Creditor - a person or organization to whom a liability is owed. Notes Payable - promissory notes that a business issues to creditors. Current liabilities - liabilities due within a short time, usually within a year. Notes payable are generally paid within one year, so are considered current liabilities . Issuing a note payable to borrow money from a bank When a business issues a note payable, the principal or face amount of the note is credited to a liability account titled Notes Payable . (Normal credit balance)
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5 April 1, 20-- Issued a 6-month, 10% note, $6,000.00. Note Payable No. 4. Cash Debited Notes Payable Credited Cash receipts journal entry - page 647. The bank retains the original copy of the note until the maturity value is paid. A copy of the note payable is the source document used to record the transaction. No entry is made for interest until a later date when it is paid. Paying principal and interest on a note payable at maturity When a note payable reaches the maturity date, the maker of the note pays the maturity value (principal plus interest) to the payee. Interest expense - the interest accrued on money borrowed. The interest accrued on a note payable is debited to an expense account titled Interest Expense . (Normal debit balance). Listed in Other Expenses in a chart of accounts. October 1, 20-- Paid cash for the maturity value of Note Payable No. 4: principal, $6,000.00, plus interest, $300.00; total, $6,300.00. Check No. 573. Notes Payable Debited Interest Expense Debited Cash Credited Cash payments journal entry - page 648.
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6 Issuing and paying a note payable for an extension of time A business may ask for an extension of time if it is unable to pay an account when due. When a request for more time is made, sometimes the business is asked to issue a note payable.
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  • Spring '13
  • Black
  • Interest, Promissory note

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