The journal entry to record a note received from a customer to replace an account is
A) debit Notes Receivable; credit Accounts Receivable
B) debit Accounts Receivable; credit Notes Receivable
C) debit Cash; credit Notes Receivable
D) debit Notes Receivable; credit Notes Payable

Question

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When a note is received to replace an account receivable, the company debits Notes Receivable (indicating it now has a note receivable instead of an account receivable) and credits Accounts Receivable (indicating the reduction in accounts receivable).

The Journal Entry to Record a Note Received from a Customer