Question

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $20,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Answer 1

journal entry to record the collection of the note would be:

debit to Notes Receivable for $20,000

credit to Notes Receivable for $20,300

debit to Interest Receivable for $300

*credit to Interest Revenue for $300

More about journal entry:

A journal entry is a record of a business transaction in an organization's accounting system. Journal entries are the foundation of the double-entry accounting method, which has been used to keep financial records for centuries. They allow a company to track what its resources have been used for and where those resources came from.

More about Notes Receivable:

Amounts owed by customers for which a formal credit agreement has been written and signed Typically used when payment is not expected for more than 60 days. A formal credit account requiring interest is sometimes used to settle an account receivable. Depending on the term of the note, it can be a current or noncurrent asset. The borrower on a note is referred to as the "Maker." The "payee" is the party making the loan.

Interest Receivable:

It is the interest earned by the company, but not yet collected in cash.

Learn more about Receivable here:

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