The Jiminez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise.When the note is collected,the interest earned should be credited to
A) Interest Income.
B) Sales.
C) Allowance for Doubtful Accounts.
D) Notes Receivable.

Question

Quizplus · Accepted Answer

The interest earned on an interest-bearing note is considered interest income and should be credited to that account when the note is collected. This represents additional revenue earned by the company beyond the original sale of merchandise.

The Jiminez Company Accepted an Interest-Bearing Note to Settle a Past-Due