Describe a note receivable and compute interest and maturity date

the maker of a note

The person or business that signs a note and thus promises to make payment.

the maturity of a note is expressed in months / years

maturity is on the same day of the month as the original date ex. 3 month note started on Jan. 10 - due Apr. 10

maturity date

number of days after the note's date

examples for using promissory notes are

paying for products or services and lending and borrowing money

the amount borrowed on a note is referred to as the

principle

what is the calculation to find the interest due on a note ?

principle of the note x annual interest rate x time expressed in fraction of a year = interest

to a lender interest is

revenue

when the maturity of a note exceeds 30 days, it can be helpful to set up a

schedule to determine the maturity date

for legal reasons, sellers generally prefer to receive notes when

the credit period is long, and when the receivable is a large amount

due date/maturity date

the date the note is to be paid

the maturity date countdown starts when

the day after the note was signed / began

The maturity date is

the day the note (principal and interest) must be repaid

Note Receivable

Asset (usually Long-Term). Anticipation of future cash payments, with interest, from a customer or borrower.

maturity date of a note

The date the note (principal and interest) must be repaid.

when something is due on demand it means that

it is due simply when the lender demands that it is due

Sellers sometimes ask for a note receivable to replace an account receivable when

a customer requests more time to pay a past-due account

note payable

a liability resulting from the signing of a promissory note

A note receivable is a

a written promise to pay a specified amount of money at a stated future date.

promissory note

a written promise to pay a specified amount of money on demand or at a definite time, usually with interest

because accounts receivable and notes receivable have different legal standings, they are

accounted for seperately

Interest rates are normally stated in

annual terms

banker's rule

calculating interest based on 360 days in the calendar year Time is exact days/360 in calculating simple interest

a note was signed on June 15th and has a 5 day maturity rate. On what date will the amount be due

count five days after the 15th, so it will be due the 20th

many notes express a maturity period expressed in

days (each day, not just business days, is counted)

A note received is recorded at its principal amount by

debiting the Notes Receivable account.

to a borrower interest is an

expense

The amount of interest on the note is computed by

expressing time as a fraction of one year and multiplying the note's principal by this fraction and the annual interest rate.

we continue to use the banker's rule today for

interest computations

payee of a note

the person or business to whom the amount of a note is payable

period of a note

the time from the note's (contract) date to its maturity date