Barrel Enterprises was unable to collect a $1,900 note receivable plus $80 interest on the maturity date, but hoped to collect the amount in the future. Barrel Enterprises should record this event on the maturity date as:
A) debit Bad Debts Expense $1,900; credit Notes Receivable $1,900.
B) debit Allowance for Doubtful Accounts $1,980; credit Notes Receivable $1,980.
C) debit Accounts Receivable $1,900; debit Interest Income $80; credit Cash $1,980.
D) debit Accounts Receivable $1,980; credit Interest Income $80; credit Notes Receivable $1,900.

Question

Quizplus · Accepted Answer

Barrel Enterprises should record the total amount due as Accounts Receivable, which includes both the principal and interest, and remove the note from Notes Receivable while recognizing the interest income.

Barrel Enterprises Was Unable to Collect a $1,900 Note Receivable