Question

on june 6, gold bank & trust lent $90,000 to sharri silverthorn on a 60 - day, 6% note.
requirements

1. journalize for gold bank & trust the lending of the money on june 6
2. journalize the collection of the principal and interest at maturity. specify the date. round to the nearest dollar

requirement 1. journalize for gold bank & trust the lending of the money on june 6 (record debits first, then credits. select the explanation on the last line of the journal entry table )

date accounts and explanation debit credit
jun 6

Explanation:

Requirement 1:

Step1: Lending money

When lending money, the bank records an increase in Notes Receivable (debit) and a decrease in Cash (credit).

Date	Accounts and Explanation	Debit	Credit
	Cash		$90,000
	(To record lending money on a note)

Requirement 2:

Step1: Calculate interest

The formula for simple interest is $I = P\times r\times t$, where $P=\$90,000$, $r = 6\%=0.06$, and $t=\frac{60}{365}$ (assuming a 365 - day year).
$I=90000\times0.06\times\frac{60}{365}=\frac{90000\times0.06\times60}{365}=\frac{324000}{365}\approx\$888$

Step2: Determine maturity date

June has 30 days. From June 6 to June 30: $30 - 6=24$ days. Then in July: $60 - 24 = 36$ days. So the maturity date is August 5 (since July has 31 days).

Step3: Journalize collection

When collecting principal and interest, the bank records an increase in Cash (debit), a decrease in Notes Receivable (credit), and recognizes Interest Revenue (credit).

Date	Accounts and Explanation	Debit	Credit
	Notes Receivable		$90,000$
	Interest Revenue		$888$
	(To record collection of note and interest)

Answer:

For Requirement 1:

Date	Accounts and Explanation	Debit	Credit
	Cash		$90,000$
	(To record lending money on a note)

For Requirement 2:

Date	Accounts and Explanation	Debit	Credit
	Notes Receivable		$90,000$
	Interest Revenue		$888$
	(To record collection of note and interest)