On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $10,000 face value and 6% interest. On October 30, the journal entry to record the collection of the note should include a

Question

Quizplus · Accepted Answer

The interest on the note can be calculated as follows:
$10,000 * 6% * (90/360) = $150
Therefore, the journal entry to record the collection of the note on October 30 would be:
Debit: Cash for $10,150
Credit: Notes Receivable for $10,000
Credit: Interest Revenue for $150

On August 1, Kim Company Accepted a 90-Day Note Receivable