On January 15, 2015, Craig Company Received a Two-Month, 9 $\begin{array}{lrr} \text { Accounts Receivable-W. Pentel } &9,000\\ \text { Notes Recelvable } &&9,000\\\end{array}$

question 136

Short Answer

On January 15, 2015, Craig Company received a two-month, 9%, $9,000 note from William Pentel for the settlement of his open account. The entry by Craig Company on March 15, 2015 if Pentel dishonors the note and collection is expected is: a.
$\begin{array}{lrr} \text { Accounts Receivable-W. Pentel } &9,000\\ \text { Notes Recelvable } &&9,000\\\end{array}$

b.
$\begin{array}{lrr} \text {Accounts Receivable-W. Pentel } &9,135\\ \text { Notes Recelvable } &&9,000\\\text { interest Revenue } &&135\end{array}$

c.
$\begin{array}{lrr} \text { Accounts Receivable-W. Pentel } &8,865\\ \text {interest Revenue } &135\\\text { Notes Recelvable} &&9,000\end{array}$

d.
$\begin{array}{lrr} \text {Bad Debt Expense } &9,135\\ \text {Notes Recelvable } &&9,135\\\end{array}$

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Definitions:

First Mortgage

A primary lien on a property that takes precedence over all other mortgages or liens, typically related to the original loan used to purchase the property.

Second Mortgage

A loan taken out on a property that is already mortgaged, with the second loan being subordinate to the first.

Mortgage Rate

The interest rate charged by a lender for a loan used to purchase a property.

Average Cost

The total cost of production divided by the number of units produced, representing the cost per unit.