Sylvestor Systems borrows $162,000 cash on May 15 by signing a 180-day, 6%, $162,000 note.1. On what date does this note mature?2-a. Prepare the entry to record issuance of the note.2-b. First, complete the table below to calculate the interest expense at maturity. Use those calculated values to prepare your entry to record payment of the note at maturity.

To answer these questions, we will go step by step:

### 1. Date of Maturity
The note has a term of **180 days**, starting on **May 15**. To calculate the maturity date:
- May has 31 days. From May 15 to May 31, there are $ 31 - 15 = 16 $ days.
- The remaining days in the note term are $ 180 - 16 = 164 $ days.
- June has 30 days.
- July has 31 days.
- August has 31 days.
- September has 30 days.
- Adding these up:
  - 30 (June) + 31 (July) + 31 (August) + 30 (September) = 122 days.
  
  Now, subtracting from 164 days:  
  $ 164 - 122 = 42 $ days into **October**.

So, the maturity date is **October 42** which doesn't exist, so this falls on **November 11** (since we continue from October 31, with 11 more days into November).

### 2-a. Entry to Record Issuance of the Note (on May 15)
When the note is issued, the company borrows cash, and a liability (the note) is created. The journal entry would be:

**May 15:**
```
   Debit: Cash             $162,000
   Credit: Notes Payable    $162,000
```

### 2-b. Calculating Interest Expense at Maturity

#### Interest Calculation:
The formula for interest is:
\[
\text{Interest} = \text{Principal} \times \text{Rate} \times \frac{\text{Time}}{360}
\]
where:
- Principal = $162,000
- Rate = 6% or 0.06
- Time = 180 days

\[
\text{Interest} = 162,000 \times 0.06 \times \frac{180}{360} = 4,860
\]

So, the interest expense at maturity is **$4,860**.

#### Maturity Entry:
At maturity, Sylvestor Systems must pay back the principal and the interest. The journal entry on **November 11** would be:

**November 11:**
```
   Debit: Notes Payable          $162,000
   Debit: Interest Expense         $4,860
   Credit: Cash                  $166,860
```

### Summary:
1. Maturity Date: **November 11**
2-a. Issuance Entry:
```
   Debit: Cash             $162,000
   Credit: Notes Payable    $162,000
```
2-b. Maturity Entry (after calculating interest):
```
   Debit: Notes Payable          $162,000
   Debit: Interest Expense         $4,860
   Credit: Cash                  $166,860
```

Would you like further details on these calculations or have any other questions?

### 5 Follow-up Questions:
1. How do we account for interest expense incurred before the maturity date?
2. What happens if Sylvestor Systems decides to pay off the note early?
3. What impact does this loan have on Sylvestor Systems' balance sheet immediately after issuance?
4. How would you handle the note if the interest rate was compounded monthly instead of annually?
5. What would be the effect on interest expense if the note had a longer term (e.g., 360 days)?

### Tip:
Always check whether the note specifies a 360-day or 365-day year when calculating interest for accuracy.

Sylvestor Systems borrows $162,000 cash on May 15 by signing a 180-day, 6%, $162,000 note. 1. On what date does this note mature? 2-a. Prepare the entry to record issuance of the note. 2-b. First, complete the table below to calculate the interest expense at maturity. Use those calculated values to prepare your entry to record payment of the note at maturity.

Learn how to calculate the maturity date and prepare journal entries for a $162,000 loan with 6% interest over 180 days. This problem involves using the simple interest formula and recording entries for issuance and payment at maturity. Perfect for college-level accounting and finance students.

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