A note renewed at maturity would have the following effects for a seller:
A) debit to Notes Receivable (new); debit to Notes Receivable (old); credit to Cash; credit to Interest Income.
B) debit to Notes Receivable (old); debit to Cash; debit to Notes Receivable (new); credit to Interest Income.
C) debit to Notes Receivable (new); debit to Cash; credit to Notes Receivable (old); credit to Interest Income.
D) debit to Notes Receivable (old); debit to Interest Income; credit to Notes Receivable (new); credit to Cash.

Question

Quizplus · Accepted Answer

When a note is renewed, the old note is settled, and a new note is issued. This involves debiting the new Notes Receivable, crediting the old Notes Receivable, and recognizing any interest income. Cash is not involved in the renewal process.

A Note Renewed at Maturity Would Have the Following Effects