Suppose a company accepts a Note Receivable to settle a past due balance in Accounts Receivable. How would the company record this transaction? Provide an example and related journal entry.
Note receivable is a promissory note to pay amount due at future date to settle the current account
XYZ company accepts a 6 month 8% note receivable from existing customer on 1jan 20x8 for an amount $ 50000
Journal entry in books of XYZ company
|1 jan 20x8||Note receivable||50000|
|[being note received for amount due ]|
|30 june 20x8||cash||52000|
|Interest revenue [50000*.08*6/12]||2000|
|[Being note collected on due date]|
If note is note collected on due date ,Journal entry:
|30 june 20x8||Accounts receivable||52000|
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