On November 1, 2019, Kringle Company accepted a 3-month note receivable as payment for services provided to Kris Company. The face value was $54,000 and it had a stated 6% annual rate of interest. Kringle Company closed its books on December 31, 2019.
On February 1, 2020, the journal entry to record the collection of the note should include a credit to:

Question

Quizplus · Accepted Answer

To accrue interest income on the note from Kris Company
 11ee7640_e1d4_d3b5_90da_81671dbd1ab7_TBCB1007_00 ($54,000 × 0.06 × 2/12 = $540).
When the note is subsequently paid on Feb. 1, 2020, Kringle Company makes the following journal entry:
Received payment of principal and interest from Kris Company
 11ee7640_e1d4_d3b6_90da_ed946e99db91_TBCB1007_00 ($54,000 × 0.06 × 1/12= $270)

On November 1, 2019, Kringle Company Accepted a 3-Month Note