Question

The entry to record the issuance of a note receivable is ______. Multiple choice question. debit Notes Receivable and credit Cash debit Cash and credit Notes Receivable debit Cash and Interest Receivable and credit Notes Receivable debit Cash and credit Notes Receivable and Interest Revenue debit Notes Receivable and credit Cash and Interest Revenue

Answer 1

The entry to record the issuance of a note receivable is debit Notes Receivable and credit Cash.

What is Note Receivable ?

A note receivable is an asset account tied to an underlying promissory note, which details in writing the payment terms for a purchase between a “payee” (typically a company, and sometimes called a creditor) and the “maker” of the note (usually a customer or employee, and sometimes called a debtor).

The journal entry for interest on a note receivable is to debit the interest income account and credit the cash account.

Notes receivable are a balance sheet item that records the value of promissory notes that a business is owed and should receive payment for. A written promissory note gives the holder, or bearer, the right to receive the amount outlined in the legal agreement.

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