Warner Enterprises Was Unable to Collect a $1,500 Note Receivable

question 40

Multiple Choice

Warner Enterprises was unable to collect a $1,500 note receivable plus $75 interest on the maturity date,but hoped to collect the amount in the future.Warner should record this as:

• A)debit Bad Debts Expense $1,500;credit Notes Receivable $1,500.
• B)debit Allowance for Doubtful Accounts $1,575;credit Notes Receivable $1,575.
• C)debit Accounts Receivable $1,500;credit Interest Income $75;credit Cash $1,575.
• D)debit Accounts Receivable $1,575;credit Interest Income $75;credit Notes Receivable $1,500.

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Definitions:

Communal Relationships

Relationships based on mutual love and concern, without expectation of repayment.

Exchange Relationships

Social connections where the interactions are based on reciprocal benefits and the expectation of receiving something in return for what is given.

Partners' Needs

The essential emotional, physical, and psychological requirements of one's significant other in a relationship, recognizing and addressing which can enhance mutual satisfaction.

Triangular Theory

A theory proposed by Robert Sternberg, outlining the components of love as intimacy, passion, and commitment.