If a 15%, 60-day note receivable is acquired from a customer in settlement of an existing account receivable of $5,000, the accounting entry for acquisition of the note will:
A) Include a debit to Notes Receivable for $5,750.
B) Include a debit to Notes Receivable for $5,062.50.
C) Include a credit to Interest Revenue for $62.50.
D) Include a debit to Notes Receivable for $5,000 and no entry for interest.

Question

Quizplus · Accepted Answer

The note receivable is recorded at its face value of $5,000, and interest is not recorded until it is earned over time.

If a 15%, 60-Day Note Receivable Is Acquired from a Customer