Notes receivable can be defined as a financial instrument,
received by a person (receiver), from the person who owes certain
amount to that person (receiver) wherein, the issue of the note
signs to pay a certain amount, along with interest if any, after a
specific period of time.
For example,
Mr X sold certain goods worth $ 20000 worth Mr Y.
My Y did not pay the amount on the sale day and instead issued a
note stating that he will pay $ 20000 at 2% interest after 3
months.
This note is Notes Payable for Mr Y and Notes receivables for Mr
X.
Calculation of interest due on short term notes
receivables.
Interest due = Face value of notes receivables x rate of interest x
Period outstanding.
Taking the above example,
Interest due at maturity = $ 20000 x 2% x 3months/12months = $
100