Asked by Bennie Raymond on Jun 14, 2024
Verified
What entry should be made on July 9 to record receipt of the note?
A) Debit Accounts Receivable $8,500; credit Sales $8,500.
B) Debit Notes Receivable $8,670; credit Sales $8,670.
C) Debit Notes Receivable $8,500; credit Accounts Receivable $8,500.
D) Debit Notes Receivable $8,500; credit Sales $8,500.
E) Debit Notes Receivable $8,725; credit Interest Revenue $225; credit Accounts Receivable $8,500.
Payment on Account
A payment made towards an outstanding account balance, before the final settlement of the account.
Notes Receivable
Written promises for amounts to be received by a business, typically with interest, from other parties or customers.
- Implement and maintain records of transactions involving notes receivable, focusing on interest computation and the protocol for dishonored notes.
Verified Answer
NM
Nidhi MishraJun 16, 2024
Final Answer :
C
Explanation :
When a company receives a note receivable in exchange for an outstanding account receivable, it should debit Notes Receivable for the principal amount of the note and credit Accounts Receivable for the same amount, indicating the transfer of the customer's obligation from an open account to a formal note.
Learning Objectives
- Implement and maintain records of transactions involving notes receivable, focusing on interest computation and the protocol for dishonored notes.
Related questions
Define a Note Receivable and Explain How to Calculate the ...
Valley Spa Purchased $7,800 in Plumbing Components from Tubman Co ...
On November 19,Nicholson Company Receives a $15,000,60-Day,8% Note from a ...
Compute the Maturity Date for the Note ...
On November 1,Orpheum Company Accepted a $10,000,90-Day,8% Note from a ...