Mr Potts Issued a 90-Day, 7% Note for $200,000, Dated

question 27

Essay

Mr. Potts issued a 90-day, 7% note for $200,000, dated February 3 to Valley Co. on account. (Assume a 360-day year when calculating interest.)
(a) Determine the due date of the note.
(b) Determine the interest.
(c) Determine the maturity value of the note.
(d) Journalize the entry to record the receipt of the note from Potts on Feb. 3.
(e) Journalize the entry to record the receipt of payment of the note at maturity by Valley Co.

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Definitions:

Plan Assets

Assets set aside to meet future obligations, typically used in pension and retirement plans.

Pension Asset

An asset on the balance sheet, representing the company's surplus or prepaid contributions in its pension fund.

Journal Entries

Journal entries are the formal accounting record of financial transactions in the order they occur in a company’s financial system.

Pension Expense

The annual cost recognized by an employer for the benefits earned by employees in the employer-sponsored pension plan during the year.