When the holder of an interest-bearing note is unable to collect the note when due, the journal entry includes
A) debiting Notes Receivable and crediting Accounts Receivable.
B) debiting Notes Receivable and crediting Accounts Receivable and Interest Revenue.
C) debiting Accounts Receivable and crediting Interest Revenue.
D) debiting Accounts Receivable and crediting Notes Receivable and Interest Revenue.

Question

Quizplus · Accepted Answer

When a note is not collected at maturity, the amount due is transferred to Accounts Receivable, and the interest earned is recognized by crediting Interest Revenue.

When the Holder of an Interest-Bearing Note Is Unable to Collect