Warner Enterprises was unable to collect a $1,000 note receivable plus $60 interest on the maturity date,but hoped to collect the amount in the future.Warner should record this as:
A)debit Bad Debts Expense $1,000; credit Notes Receivable $1,000.
B)debit Allowance for Doubtful Accounts $1,060; credit Notes Receivable $1,060.
C)debit Accounts Receivable $1,060; credit Interest Income $60; credit Notes Receivable $1,000.
D)debit Accounts Receivable $1,000; debit Interest Income $60; credit Cash $1,060.

Question

Quizplus · Accepted Answer

When Warner is unable to collect the note and interest, it should transfer the amount to Accounts Receivable, indicating the total amount due, while recognizing the interest income separately.

Warner Enterprises Was Unable to Collect a $1,000 Note Receivable