The holder,or payee,of a dishonored note should transfer the total amount due,including interest income,from Notes Receivable to an individual account receivable for the debtor.

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When a note is dishonored, it means that the debtor failed to pay the amount due to the holder of the note. Therefore the amount due, including interest income, should be transferred from Notes Receivable to an individual account receivable for the debtor. This way, the holder or payee of the note will no longer have a note receivable, but a new accounts receivable from the debtor.

The Holder,or Payee,of a Dishonored Note Should Transfer the Total