A business issued a 60-day, 4\% note for $12,000 to a creditor on account. The company uses a 360-day year for interest calculations. Journalize the entries to record (a) the issuance of the note and (b) the payment of the note at maturity, including interest. If an amount box does not require an entry, leave it blank or enter 0. When required, round your answers to the nearest dollar
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To calculate the interest, we use the formula: Interest = Principal x Rate x Time. Principal = $512,000 Rate = 4% = 0.04 Time = 60 days / 360 days (since the company has a 360-day year for interest) Interest = $512,000 x 0.04 x (60/360) = $3,413.33 Show more…
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