If a bank statement included a bank collection of a note receivable and the related interest revenue,the journal entry to record this item should include a:
A)debit to Note Receivable and a credit to Cash.
B)debit to Cash and a credit to Note Receivable.
C)debit to Cash,credit to Note Receivable,and credit to Interest Revenue.
D)debit to Note Payable,credit to Cash and credit to Interest Revenue.

Question

Quizplus · Accepted Answer

When the bank collects a note receivable and the related interest revenue, it means that the debtor made a payment to the bank. Therefore, the bank account (Cash) should be debited, and the Note Receivable account should be credited to eliminate the liability. Additionally, since the debtor paid interest to the bank, the Interest Revenue account should also be credited. Therefore, the correct journal entry to record this item would be a debit to Cash, a credit to Note Receivable, and a credit to Interest Revenue. Option C is the only one that includes all three accounts. The other options either have the wrong account or are missing an account.

If a Bank Statement Included a Bank Collection of a Note