Question

Indicate whether these receivables are reported as accounts receivable, notes receivable, or other receivables on a balance sheet. (a) Advanced $10,000 to an employee. select an account title (b) Received a promissory note of $34,000 for services performed. select an account title (c) Sold merchandise on account for $60,000 to a customer. select an account title

Answer 1

Answer:

Indicating how each receivable is reported on the balance sheet:

(a) Advanced $10,000 to an employee = Other Receivable

(b) Received a promissory note of $34,000 for services performed = Notes Receivable

(c) Sold merchandise on account for $60,000 to a customer = Accounts Receivable

Explanation:

The advance to an employee is reported as Other Receivable, while the credit sale to a customer is reported as an Accounts Receivable.  Finally, the promissory note received from a client for services rendered on credit is reported as Notes Receivable.  This classification of receivables shows the true nature of the underlying transactions.