JournaldrillPaying a note at maturity
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
On November 1, Redstone Signs signed a $30,000, 6-month, 6% note payable. On December 31 it correctly accrued $300 of interest for two months. On April 30, the maturity date, Redstone pays the note and all interest. Record the April 30 payment.
What this exercise teaches
Total interest is $30,000 x 6% x 6/12 = $900, of which $300 was accrued in December. The remaining four months, $30,000 x 6% x 4/12 = $600, is this year's expense, and cash paid is $30,000 + $900 = $30,900.
A hint if you get stuck
Clear the note and the interest accrued last year, and expense only the interest for the current year.
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