Your Company Converted an Existing Account Receivable in the Amount

question 32

Multiple Choice

Your company converted an existing account receivable in the amount of $5,000 to a note receivable to allow an extended payment period.The note is due in one year and includes an annual interest rate of 5%.The customer repays the principal at the maturity date.The entry to record the receipt of the principal includes a debit to:

• A)Cash and credit to Notes Receivable.
• B)Notes Receivable and credit to Accounts Receivable.
• C)Cash and credit to Interest Receivable.
• D)Notes Receivable and credit to Cash.

---

Definitions:

Adrenal Glands

Small glands located on top of each kidney, responsible for producing hormones that help regulate metabolism, immune system, blood pressure, response to stress, and other essential functions.

Anterior Pituitary

The front part of the pituitary gland that produces and releases hormones affecting growth, metabolism, and reproduction.

Mesoderm

The middle layer of an embryo in early development, which will develop into the muscles, bones, and much of the circulatory, reproductive, and excretory systems.

Posterior Pituitary

A part of the brain involved in the release of hormones like oxytocin and vasopressin, which regulate important bodily functions.