On July 9,Mifflin Company receives an $8,500,90-day,8% note from customer Payton Summers as payment on account.What entry should be made on July 9 to record receipt of the note?
A)Debit Accounts Receivable $8,500; credit Sales $8,500.
B)Debit Notes Receivable $8,670; credit Sales $8,670.
C)Debit Notes Receivable $8,500; credit Accounts Receivable $8,500.
D)Debit Notes Receivable $8,500; credit Sales $8,500.
E)Debit Notes Receivable $8,725; credit Interest Revenue $225; credit Accounts Receivable $8,500.

Question

Quizplus · Accepted Answer

When a note is received as payment on account, the correct entry is to debit Notes Receivable for the note's face value and credit Accounts Receivable for the same amount, indicating the transfer of the customer's obligation from an open account to a formal note.

On July 9,Mifflin Company Receives an $8,500,90-Day,8% Note from Customer