Jax Recording Studio Purchased $7,800 in Electronic Components from Music

question 141

Multiple Choice

Jax Recording Studio purchased $7,800 in electronic components from Music World.Jax signed a 60-day,8% promissory note for $7,800.Music World's journal entry to record the collection on the maturity date is:

• A)Debit Cash $7,800; credit Accounts Receivable $7,800
• B)Debit Accounts Receivable $7,904; credit Notes Receivable $7,800; credit Interest Receivable $104
• C)Debit Notes Receivable $8,008; credit Cash $7,904; credit Interest Revenue $104
• D)Debit Cash $7,904; credit Notes Receivable $7,800; credit Interest Revenue $104
• E)Debit Cash $7,904; credit Notes Receivable $7,904

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Universal Life Insurance

Similar to whole life insurance; the cash value can be used to pay the insurance premium if the policyholder doesn’t pay it, but if the cash value is not enough to pay the insurance, the policy can lapse.

Premium Payment

The amount paid for an insurance policy, either as a lump sum or in installments.

Cash Value

The amount available in cash for an insurance policy or investment account, often accessible to the policyholder or investor.