Uniform Supply accepted a $9,000, 90-day, 8% note from Tracy Janitorial on Octob

Question

Uniform Supply accepted a $9,000, 90-day, 8% note from Tracy Janitorial on October 17. If the note is dishonored, but Uniform Supply intends to continue collection efforts, what entry should Uniform Supply make on January 15 of the next year? (Assume no reversing entries are made.) (Use 360 days a year.)

Multiple Choice

a. Debit Cash $9,180; credit Interest Revenue $30; credit Interest Receivable $150, credit Notes Receivable $9,000.

b. Debit Notes Receivable $9,000; debit Interest Receivable $180; credit Sales $9,180.

c. Debit Accounts Receivable $9,180; credit Interest Revenue $30; credit Interest Receivable $150, credit Notes Receivable $9,000.

d. Debit Cash $9,180; credit Notes Receivable $9,180.

e. Debit Cash $9,180; credit Interest Revenue $150; credit Interest Receivable $30, credit Notes Receivable $9,000.

Explanation / Answer

Debit Accounts Receivable $9,180; credit Interest Revenue $30; credit Interest Receivable $150, credit Notes Receivable $9,000. Accounts receivable 9180          Interest Revenue 30 =9000*8%/360*15          Interest Receivable 150 =9000*8%/360*75          Notes Receivable 9000 Option C is correct

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