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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

The maker of a $240,000, 6%, 90-day note receivable failed to pay the note on the due date of November 30. What accounts should be debited and credited by the payee to record the dishonored note receivable?

To determine

Dishonored note:

Note receivable refers to a written promise by the debtor for the amounts to be received within a stipulated period of time. Note is otherwise known as promissory note. If this promissory note is not settled by the debtor at its maturity date, then it became is known as dishonored note.

To identify: The accounts that would be debited and credited in the books of payee to record the dishonored note receivable.

Explanation

Identify the accounts that would be debited and credited in the books of payee to record the dishonored note receivable.

Date Account Title and Explanation Debit ($) Credit ($)
November 30 Accounts receivable 243,600  
    Notes receivable   240,000
      Interest revenue   3,600
  (To record note dishonored)    

Table (1)

Working note:

Calculate the amount of interest revenue earned on note for the period 90 days...

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