DO IT!3 | Recognizing Notes Receivable Gambit Stores accepts from Leonard Co. a $3,400.90-day, 6% note dated May 10 in settlement of Leonard's overdue account. (a) What is the maturity date of the note? (b) What is the interest payable at the maturity date? (c) What entry does Gambit make at the maturity date, assuming Leonard pays the note and interest in full at that time? ACTION PLAN . Count the exact number of days to determine the maturity date. Omit the date the note is issued, but include the due date. Compute the accrued interest. Prepare the entry for payment of the note and the interest. Solution a. The maturity date is August 8, computed as follows. Term of note: May (31-10) June July Maturity date: August b. The interest payable at the maturity date is $51, computed as follows Interes = Face X Ratex Time $3,400 X 6% X 90/360 c. Gambit Stores records this entry at the maturity date: Cash Notes Receivable Interest Revenue (To record collection of Leonard note and interest Related exercise material: BE9.8, BE9.9, BE9.10, DO IT! 9.3, E9.12, 19.13, and E9.14 DO IT! 4 | Analysis of Receivables In 2020. Phil Mickelson Company has not credit sales of $923,795 for the year. It had a beginning accounts receivable (net) balance of $38.275 and an ending accounts receivable (net) balance of $35,988. Compute Phil Mickelson Company's (a) accounts receivable turnover and (b) average col- lection period in days. ACTION PLAN Review the formula to compute the accounts receivable turnover. Make sure that both the beginning and ending accounts receivable balances are considered in the computation. Review the formula to compute the average collection period in days. Solution Net credit sales + Average net accounts receivable $38.275 + $35,988 Accounts receivable turnover | $923,795 24.9 times Accounts receivable Days in year turnover 24.9 times Related exercise material: BE9.12, DO IT! 9.4, and E9.17. Average collection period in days 14.7 days 365