Asked by Zachariah Andress on May 04, 2024
Verified
A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. The journal entry to recognize this event is
A) debit Cash, $6,120; credit Notes Receivable, $6,120
B) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Receivable, $120
C) debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
D) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; credit Interest Revenue, $120
Maturity
The time at which a financial obligation must be repaid or settled in full.
Notes Receivable
Financial assets representing amounts owed to a company by others, typically from loans or credit extended, evidenced by promissory notes.
Journal Entry
The form of recording a transaction in a journal.
- Ascertain and register the interest on notes receivable.
- Chronicle the methods for projecting, altering, and erasing uncollectible accounts receivable via journal entries.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
D
Explanation :
The note receivable is not paid and has matured, so it needs to be written off. The accounts receivable is debited to recognize that the payment is now overdue, and the notes receivable is credited to write off the amount. Since interest was accrued on the note, interest revenue should also be recognized, so it is credited in the amount of $120. Therefore, the correct journal entry option is D.
Learning Objectives
- Ascertain and register the interest on notes receivable.
- Chronicle the methods for projecting, altering, and erasing uncollectible accounts receivable via journal entries.
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