Question

Majesty Productions accepted a $7,200, 120-day, 6% note from Swartz Studio on March 1. On the date the note matures, Swartz is unable to pay, but Majesty intends to continue collection efforts. What entry should Majesty record on the maturity date for this dishonored note?

Answer 1

Answer:

Check the explanation

Explanation:

The accounting entry (which is an official record/book that documents a transaction of the day to day activities of a business. In most cases, an entry is prepared through the principles of the double entry bookkeeping system, which involves one to create both a debit and credit entry, and which ultimately leads to the creation of a comprehensive set of financial statements.) for Majesty record on the maturity date for this dishonored note is in the attached image below:

Answer 2

Answer:

Debit Accounts Receivable $7,344

Credit Interest Revenue $144

Credit Notes Receivable $7,200

Explanation:

Majesty Production

Interest: $7,200 × .06 × 120/360 = $144

Therefore the entry that Majesty should record on the maturity date for this dishonored note are below:

Debit Accounts Receivable $7,344

Credit Interest Revenue $144

Credit Notes Receivable $7,200.