Your Company Lent a Customer $5,000 to Satisfy the Customer's

question 56

Multiple Choice

Your company lent a customer $5,000 to satisfy the customer's overdue accounts receivable.The loan is for one year at an annual interest rate of 5%.Six months later the customer repays the principal and interest.The principal part of the repayment should be recorded as a:

• A)debit to Cash and credit to Notes Receivable.
• B)debit to Notes Receivable and credit to Interest Revenue.
• C)debit to Cash and credit to Accounts Receivable.
• D)debit to Allowance for Bad Debts and credit to Cash.