If a 5%, 120-Day Note Receivable Is Acquired from a Customer

question 58

Multiple Choice

If a 5%, 120-day note receivable is acquired from a customer in settlement of an existing account receivable of $50,000, the accounting entry for acquisition of the note will:

• A) Include a debit to Notes Receivable for $50,822.
• B) Include a debit to Notes Receivable for $50,208.
• C) Include a credit to Interest Revenue for $822.
• D) Include a debit to Notes Receivable for $50,000 and no entry for interest.

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Definitions:

James Marcia

A developmental psychologist best known for his work on adolescent identity development, particularly his theory of identity status.

Identity

The fact of being who or what a person or thing is, often referring to aspects of self-concept and social representation.

Parents

The caregivers of a child, who may be biological or adoptive mothers and fathers, providing support, guidance, and resources for the child's development.

Peers

Individuals who are equal in age or position, often influencing behavior and social development.