Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on Octo
ID: 2584104 • Letter: U
Question
Uniform Supply accepted a $4,800, 90-day, 10% note from Tracy Janitorial on October 17. If the note is dishonored, what entry should Uniform Supply make on January 15 of the next year, assuming interest was properly accrued at the previous December 31 year end?
Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.
Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20, credit Notes Receivable $4,800.
Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.
Debit Cash $4,920; credit Notes Receivable $4,920.
Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920.
Explanation / Answer
1) Answer (A)
Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.
Explanation : Since the Note was dishonored it will be credited with it's face value and will be charged to account receivable as a generation of new asset together with interest recognized and as well accrued during the year.
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