1. LESSON 20-1
Promissory Notes

2. USES OF PROMISSORY NOTES
page 589
1. Number
2. Date of a note
4. Time of a note
3. Payee
5. Principle
6. Interest rate
7. Maturity date
8. Maker

3. INTEREST ON PROMISSORY NOTES
page 590
Interest for One Year
Interest for One Year =
Time in Years ×
Interest Rate
Principal
$20,000.00 × 6% × 1 =
$1,200.00
Interest for Fraction of Year
Interest for Fraction of Year =
Time as Fraction of Year ×
Interest Rate
Principal
$20,000.00 × 6% × 90
360 =
$300.00

4. INTEREST ON PROMISSORY NOTES
page 590
INTEREST ON PROMISSORY NOTES
Maturity Value
Maturity Value =
Interest +
Principal
$20,300.00 =
$300.00 +
$20,000.00

5. MATURITY DATE OF PROMISSORY NOTES
page 591
May 18, 90-Day Note
May18–May days
June 30 days
July 31 days
August 1–August days
Total 90 days 1 2 3 4
1. Subtract the date of the note from the number of days in the first month.
2. Add 30 days for June.
3. Add 31 days for July.
4. Add only 16 days in August.

6. LESSON 20-2
Notes Payable

7. SIGNING A NOTE PAYABLE
page 593
May 18. Signed a 90-day, 6% note, $20, Receipt No. 345. 1 2 3 4 5
1. Write the date.
2. Write the account title.
3. Write the receipt number.
4. Write the principle amount in the General Credit column.
5. Write the same amount in the Cash Debit column.

8. PAYING PRINCIPLE AND INTEREST ON A NOTE PAYABLE
page 594
August 16. Paid cash for the maturity value of the May 18 note: principal, $20,000.00, plus interest, $300.00; total, $20, Check No. 721. 1 2 3 4 5 6 7
1. Write the date.
6. Write the interest expense amount.
2. Write the account title.
7. Write the amount of cash paid.
3. Write the check number.
4. Write the note’s principal amount.
5. Write the account title.

9. SIGNING A NOTE PAYABLE FOR AN EXTENSION OF TIME
page 595
June 5. Restaurant Supply signed a 90-day, 12% note to Hayport Company for an extension of time on its account payable, $4, Memorandum No. 66. 1 2
1. Debit to Accounts Payable
2. Credit to Notes Payable

10. PAYING A NOTE PAYABLE ISSUED FOR AN EXTENSION OF TIME
page 596
September 3. Paid cash for the maturity value of the note payable to Hayport Company: principal, $4,000.00, plus interest, $120.00; total, $4, Check No. 722.

11. LESSON 20-3
Notes Receivable

12. ACCEPTING A NOTE RECEIVABLE FROM A CUSTOMER
page 598
April 14. Accepted a 90-day, 8% note from Martin Sterling for an extension of time on his account, $3, Note Receivable No. 9. 1 2
1. Debit to Notes Receivable
2. Credit to Accounts Receivable

13. COLLECTING PRINCIPAL AND INTEREST ON A NOTE RECEIVABLE
page 599
July 13. Received cash for the maturity value of Note Receivable No. 9, a 90-day, 8% note: principal, $3,000.00, plus interest, $60.00; total, $3, Receipt No. 562. 1 2 3 4 5 6 7
1. Write the date.
5. On the next line, write the account title.
2. Write the account title.
6. Calculate and write the interest income amount.
3. Write the receipt number.
4. Write the principal amount.
7. Write the maturity value.

14. RECORDING A DISHONORED NOTE RECEIVABLE
page 600
May 6. Jill Davis dishonored Note Receivable No. 12, a 90-day, 8% note, maturity value due today: principal, $600.00; interest, $12.00; total, $ Memorandum No. 92. 1 2 3
1. Debit to Accounts Receivable
2. Credit to Notes Receivable
3. Credit to Interest Income
The slides in this tutorial were based a PowerPoint presentation provided by South-Western Century 21 Accounting. The slides were edited and Microsoft Action Script characters were added to help meet the needs of my students.