Question

A company accepted a $10,000 note receivable from a customer for a term of 3 months...

A company accepted a $10,000 note receivable from a customer for a term of 3 months at a rate of 6%. After accruing interest revenue for two months, in the third month the company discovered there was no hope of collection. The entry to write-off the note would include (Select all that apply). A : DR Allowance for Doubtful Accounts, $10,100. B : CR Interest Receivable, $100. C : DR Allowance for Doubtful Accounts, $11,200. D : CR Interest Receivable, $1,200. E : CR Notes Receivable $10,000. F : CR Notes Receivable $10,100.

Homework Answers

Answer #1

Correct answer---(B)-Credit Interest Receivable $ 100-----(A) Dr Allowance for Doubtful Accounts, $10,100 and (E) Credit notes receivable $10000

Complete entry will be as follows

Accounts title and Explanation

Debit

Credit

Allowance for Doubtful accounts

$ 10,100.00

            Notes Receivables

$ 10,000.00

             Interest Receivables

$        100.00

(Notes receivable written off)

Interest for only 2 months was recorded so 2 months interest will be reversed.

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