If a 15%, 60-Day Note Receivable Is Acquired from a Customer

question 30

Multiple Choice

If a 15%, 60-day note receivable is acquired from a customer in settlement of an existing account receivable of $5,000, the accounting entry for acquisition of the note will:

• A) Include a debit to Notes Receivable for $5,750.
• B) Include a debit to Notes Receivable for $5,062.50.
• C) Include a credit to Interest Revenue for $62.50.
• D) Include a debit to Notes Receivable for $5,000 and no entry for interest.

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