Determine the Account and Amount to Be Debited and the Account

question 31

Short Answer

Determine the account and amount to be debited and the account and amount to be credited for the following adjustment. On December 31, 2019, the Notes Payable account had a balance of $6,000 for a 3-month, 9 percent note issued on November 1, 2019.

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Definitions:

Cost Recovery Method

A revenue recognition method where no profit is recognized until the costs of the sold goods or services are fully recovered.

Installment Sales

A method of sale that allows the buyer to make payments over a period of time, while the seller recognizes income as payments are received.

Collectibility

The likelihood or ability of a company to collect payments from customers for goods or services provided, considered when recognizing revenue.

Completed Transaction Method

An accounting method that recognizes revenue and expenses only when a transaction has been completed.